Islamic Ethics and the
Implications for Business
ABSTRACT. As global business operations expand,
managers need more knowledge of foreign cultures,
in particular, information on the ethics of doing
business across borders. The purpose of this paper
is twofold: (1) to share the Islamic perspective
on business ethics, little known in the west, which
may stimulate further thinking and debate on the
relationships between ethics and business, and (2)
to provide some knowledge of Islamic philosophy
in order to help managers do business in Muslim
cultures. The case of Egypt illustrates some divergence
between Islamic philosophy and practice in economic
life. The paper concludes with managerial implica-
tions and suggestions for further research.
KEYWORDS: business ethics, Egypt, Islamic business
ethics, Muslim culture
Introduction
Over the centuries, as state and church separated,
particularly in western societies, religion became
a private matter. The so-called “value-free
society” developed and economists focused
exclusively on the mechanics of economics.
There is a growing realization that value-free
economics is a misnomer. Post-modern thinkers
Gillian Rice is Associate Professor of Marketing at
Thunderbird, The American Graduate School of Inter-
national Management. Her research includes study of
economic development, environmental concerns and
marketing practices in developing countries. She is a
founding member of the International Management
Development Association. Her publications include
articles in International Marketing Review,
International Journal of Forecasting, Information
and Management, The International Executive and
Journal of the Academy of Marketing Science.
Journal of Business Ethics 18: 345–358, 1999.
© 1999 Kluwer Academic Publishers. Printed in the Netherlands.
Gillian Rice
have advocated changes over the past few decades
and there has been a reintroduction of a moral
dimension in business.
An important task for many managers is how
to integrate this moral dimension into business
conducted across borders. Managers need an
appreciation of the ethical norms of different
groups and cultures in order to gain complete
understanding of the cultural environment in
which the firm must operate (Al-Khatib et al.,
1995). Relatively few empirical studies have
addressed culturally-related ethical issues (see for
example, Becker and Fritzsche, 1987; Akaah,
1990; Vitell et al., 1993; Nyaw and Ng, 1994).
Based upon the results of a study that found some
surprising significant differences between the
values of American and Thai marketers,
Singhapakdi et al. (1995) suggest that multina-
tional corporations should train their marketing
professionals differently in different parts of the
world. Amine (1996) goes further and urges that
the role of global managers should be one of
“moral champions,” committed to pursuing the
best in ethical and moral decision-making and
behavior. The definition of “best” is not an easy
task, however, when one takes into account the
many different moral philosophies that exist.
In recent years there have been a number of
articles published in the Journal of Business Ethics
which have discussed the positions of various
faiths regarding the relevance of religious ethical
principles to business decision-making (see for
example, Williams, 1993; Green, 1993; Rossauw,
1994; Gould, 1995). The Pope’s Centesimus
Annus argues that what is lacking in our time is
a moral culture capable of transforming
economic life so that it has a context in a
humane community (Williams, 1993).
346 Gillian Rice
My focus in this paper is on the ethical
principles which relate to business and which are
contained in the religion of Islam. Islam is gen-
erally misunderstood and it is often surprising
to some that it contains an entire socio-economic
system. In Islam, it is ethics that dominates eco-
nomics and not the other way around (Naqvi,
1981). My purpose is twofold: (1) to share a per-
spective on business ethics, little known in the
west, which may stimulate further thinking and
debate on the relationships between ethics and
business, and (2) to provide some knowledge of
Islamic philosophy in order to help managers
doing business in Muslim cultures deal with
cultural differences. The paper is organized as
follows. First is a description of the Islamic
ethical system. Next is a discussion of the dif-
ferences between philosophy and practice in
Islamic business ethics. This discussion forms the
basis for guidelines on doing business with people
in Muslim cultures. Egypt is used as an illustra-
tive case.
The Islamic ethical system
Muslims derive their ethical system from the
teachings of the Qur’an (which Muslims believe
is a book revealed by God to Muhammad
in seventh century Arabia), and from the
sunnah (the recorded sayings and behavior of
Muhammad). The goals of Islam are not pri-
marily materialist. They are based on Islamic
concepts of human well being and good life
which stress brotherhood/sisterhood and socio-
economic justice and require a balanced satisfac-
tion of both the material and spiritual needs of
all humans (Chapra, 1992).
A “moral filter”
There exists in most societies a relative scarcity
of resources with unlimited claims upon them. A
free-market capitalist economy uses market-
determined prices as a filtering mechanism to
distribute resources. The use of the price system
alone, however, can frustrate the realization of
socio-economic goals. Under a system of state
control, the allocation of resources is in the hands
of a bureaucracy, which is cumbersome and inef-
ficient. According to Chapra (1992), the Islamic
worldview implies that the market system should
be maintained, but that the price mechanism be
complemented with a device that minimizes
unnecessary claims on resources. This device is
the “moral filter.” This means that people would
pass their potential claims on resources through
the “filter of Islamic values” so that many claims
would be eliminated before being expressed in
the marketplace. Resources would not be allowed
to be diverted to the production of luxuries until
the production of necessities was ensured in suf-
ficient quantities (Siddiqi, 1981). The definition
of luxurious or extravagant is related to the
average standards of consumption in a society, the
idea being that large departure from the standards
would not be permissible.
Keynes’ (1972) observations on this subject
may be useful. He stated that even though “the
needs of human beings may seem to be insa-
tiable,” . . . “they fall into two classes – those
needs which are absolute in the sense that we feel
them whatever the situation of our fellow human
beings may be, and those which are relative ones
in the sense that their satisfaction lifts us above
or makes us feel superior to others. Needs of the
second class, which satisfy the desire for superi-
ority, may indeed be insatiable; for the higher the
general level, the higher still are they. But this is
not so true of the absolute needs.” Islamic jurists’
categories of necessities (daruriyyat), conveniences
(hayiyyat) and refinements (tahsiniyyat) would fall
into Keynes’ first class of needs. These are any
goods and services which fulfill a need or reduce
a hardship and make a real difference in human
well-being. Thus “comforts” are included here
(Chapra, 1992). Luxuries (the second class of
needs), however, are goods and services derived
for their snob appeal and make no difference to
a person’s well-being. Galbraith (1958) refers to
this second class of needs as “wants.”
Consumer advocates in the U.S. have long
been critical of business practices that increase
the desire for “wants” and subsequently have
adverse cultural and social effects (Williams,
1993). For example, in pursuit of profit maxi-
mization, businesses often subject the consumer
 Islamic Ethics
to advertising and sales promotion campaigns that
appeal to the consumer’s vanity, sex appetite and
envy, either overtly or covertly. Consumers are
encouraged to believe that their actualization and
social esteem are dependent on the frequency and
value of their purchases. This leads in turn to a
tremendous amount of wasteful production,
with adverse environmental as well as social
implications. According to the United Nations
Development Program (UNDP) Human Devel-
opment Report (1994), the lifestyles of the rich
nations must change; the north has a fifth of the
world’s population and four-fifths of its income
and it consumes seventy percent of the world’s
energy, seventy-five percent of its metals and
eighty-five percent of its wood. Even in these
rich countries, some of the essential needs of the
poor remain unfulfilled, and high pollution and
rapid depletion of non-renewable resources
occur.
The question, of course, is how to implement
the “moral filter” without coercion or despotism.
The filter mechanism of values must be socially-
agreed upon and some way has to be devised to
motivate consumers and businesspeople to abide
by these values. From an Islamic point of view,
social change must be gradual and cannot be
achieved through force. The Qur’anic injunction
“There is no compulsion in religion” (Qur’an
2:256) is relevant here. Change can occur by
inviting people to alter their ways or by setting
an example. Historically this is how Islam rapidly
spread through a large part of the world in the
seventh and eighth centuries (Eaton, 1994). For
example, when Muslim merchants traveled to
distant lands, the inhabitants of those lands were
impressed by the traders’ social and business
conduct and so became curious about their
beliefs. Many of these inhabitants subsequently
became Muslims. A parallel exists today with
respect to the “green” movement which con-
tinues to spread around the globe. The adoption
of environmentally conscious behavior is occur-
ring through example, encouragement and edu-
cation, as well as by legislation. Indeed, in the
environmental context, legislation is insufficient.
Only when the political will and support of the
populace are strong enough, are environmental
laws adequately enforced.
347
The Islamic ethical system contains specific
guidelines for achieving the moral filter and for
conducting business. These guidelines derive
from the interrelated concepts of unity, justice
and trusteeship which I explain below.
Unity (tawhid)
The key to the business philosophy of Islam lies
in a person’s relationship with God, His universe
and His people. In common with other revealed
religions is the moral appeal to humans to sur-
render themselves to the will of God. Islam goes
beyond this exhortation and teaches that all life
is essentially a unity because it also provides the
practical way to pattern all facets of human life
in accordance with God’s will. There should be
unity of ideas and actions in a person’s existence
and consciousness (Asad, 1993). Muslims believe
that because people are accountable to God, and
their success in the hereafter depends on their
performance in this life on earth, this adds a new
dimension to the valuation of things and deeds
in this life (Siddiqi, 1981). Islam is simply a
program of life in accord with the “laws of
nature” decreed by God. A definite relationship
between fellow humans is thus prescribed. This
is the relationship of brotherhood or sisterhood
and equality (Abu-Sulayman, 1976). In this sense,
unity is a coin with two faces: one implies
that God is the sole creator of the universe and
the other implies that people are equal partners
or that each person is a brother or sister to the
other. As far as business is concerned, this
means cooperation and equality of effort and
opportunity.
Justice (adalah)
Islam is absolutely unambiguous in its objective
of eradicating from society all traces of inequity,
injustice, exploitation and oppression. The
Qur’an also condemns vicarious guilt or merit
and teaches the greatest possible individualism
“. . . no bearer of burdens can bear the burdens
of another; . . . man can have nothing but what
he strives for . . .” (Qur’an 53:38–9). This indi-
348 Gillian Rice
vidualistic outlook on the spiritual destiny of
humanity is counterbalanced by a rigorous con-
ception of society and social collaboration. In
their acquisition of wealth, however, people
should not lie or cheat; they must uphold
promises and fulfill contracts. Usurious dealings
are prohibited. Islam teaches that all wealth
should be productive and people may not stop
the circulation of wealth after they have acquired
it, nor reduce the momentum of circulation
(Chapra, 1992).
The intense commitment of Islam to justice
and brotherhood demands that Muslim society
take care of the basic needs of the poor.
Individuals are obliged to earn a living and only
when this is impossible does the state intervene.
The Islamic institution of zakah, that is, a wealth
tax comprising compulsory charitable-giving for
specially designated groups in society, facilitates
the care of all members of society. The rich are
not the real owners of their wealth; they are only
trustees. They must spend it in accordance with
the terms of the trust, one of the most impor-
tant of which is fulfilling the needs of the poor.
The word “zakah” means purification and as
such, income redistribution is not only an
economic necessity but also a means to spiritual
salvation (“. . . of their wealth take alms so that
you might purify and sanctify.” Qur’an 9:103).
Thus, economics is effectively integrated with
ethics (Naqvi, 1981).
Trusteeship (khilafah)
People are viewed as trustees of the earth on
behalf of God. This does not mean a negation
of private property but does have some impor-
tant implications. No inhibitions attach to
economic enterprise and people are encouraged
to avail themselves of all opportunities available.
There is no conflict between the moral and
socio-economic requirements of life. There is a
very wide margin in a person’s personal and
social existence. People may be ascetics or, after
paying the wealth tax, may enjoy fully their
remaining wealth. Yet, resources are for the
benefit of all and not just a few and everyone
must acquire resources rightfully. Although
material prosperity is desirable, it is not a goal
in itself. What is crucial is the motivation, the
“ends” of economic activity. Given the right
motivation, all economic activity assumes the
character of worship (Siddiqi, 1982). Indulgence
in luxurious living and the desire to show-off is
condemned. Islam does not tolerate conspicuous
consumption (Chapra, 1992).
Resources must also be disposed of in such a
way as to protect everyone’s well-being (Al-
Faruqi, 1976). No one is authorized to destroy
or waste God-given resources. This is very
relevant to ethics concerning business and the
environment: when Abu Bakr, the first ruler of
the Islamic state after Muhammad, sent someone
on a war assignment, he exhorted him not to
kill indiscriminately or to destroy vegetation or
animal life, even in war and on enemy territory.
Thus there was no question of this being allowed
in peacetime or on home territory. Trusteeship
is akin to the concept of sustainable development.
Models of sustainable development do not regard
natural resources as a free good, to be plundered
at the free will of any nation, any generation or
any individual (UNDP, 1994). The notion of
trusteeship is also common to the Jewish and
Christian faiths; Green (1993) refers to Psalms
24:1, “The earth is the Lord’s and the fullness
thereof.”
The need for balance
Muhammad advised Muslims to be moderate in
all their affairs; he described Islam as the “middle
way.” A balance in human endeavors is neces-
sary to ensure social well-being and continued
development of human potential. Chapra (1992)
notes that Islam recognizes what Marxism sought
to deny: the contribution of individual self-
interest through profit and private property to
individual initiative, drive, efficiency and enter-
prise. At the same time, Islam condemns the evils
of greed, unscrupulousness and disregard for the
rights and needs of others, which the secularist,
short-term, this-worldly perspective of capitalism
sometimes encourages. The individual profit
motive is not the chief propelling force in Islam
(Siddiqi, 1981). Social good should guide entre-
 Islamic Ethics
preneurs in their decisions, besides profit. A
relevant saying of Muhammad is “work for your
worldly life as if you were going to live forever,
but work for the life to come as if you were
going to die tomorrow.”
Islam, like some other religions, places a
greater emphasis on duties than on rights. The
wisdom behind this is that if duties (relating to
justice and trusteeship, for example) are fulfilled
by everyone, then self-interest is automatically
held within bounds and the rights of all are
undoubtedly safeguarded. Society is the primary
institution in Islam, not the state (Cantori and
Lowrie, 1992). Chapra (1992) argues that in
order to create an equilibrium between scarce
resources and the claims on them in a way that
realizes both efficiency and equity, it is neces-
sary to focus on human beings themselves, rather
than on the market or the state. As emphasized
by Cantori and Lowrie (1992), the Islamic jurists
and the Islamic law or “shari’ah” (literally,
“road”) limit governmental power. The shari’ah
is so all encompassing that there is less need for
legislation regarding issues of ethics, social
responsibility and human interaction. In partic-
ular, Muslims believe that the Qur’an contains a
final and unambiguous statement of the truth,
added to what had gone before (for example, the
messages delivered to Moses and Jesus). The duty
of the Muslim community is to preserve this
message. Thus, Muslims have a profound horror
of anything regarded as innovation in matters of
religion, including what modern Christians
interpret as necessary adaptations of religion to
changing times (Eaton, 1994).
The emphasis is therefore on the human being
rather than on state power. The real wealth of
societies is with their people. An excessive obses-
sion with the creation of material wealth can
obscure the ultimate objective of enriching
human lives. Humans are thus the ends as well
as the means. Unless humans are motivated to
pursue their self-interest within the constraints of
economic well-being (the application of the
“moral filter”), neither the “invisible hand” of
the market nor the “visible hand” of central
planning can succeed in achieving socio-
economic goals (Chapra, 1992).
349
Summary
It should be emphasized that in Islam, business
activity is considered to be a socially useful
function; Muhammad was involved in trading for
much of his life. Great importance is attached to
views relating to consumption, ownership, goals
of a business enterprise and the code of conduct
of various business agents. A summary of the
key ethical principles in Islam which relate to
business practices is presented in Table I. Because
Judaism, Christianity and Islam are closely
related, many ethical principles such as honesty,
trustworthiness and taking care of the less
fortunate, are universal among the three religions,
and indeed, among most moral codes. For
example, as pointed out by Rossauw (1994),
someone with a Christian understanding of the
unconditional value of life cannot be careless in
the workplace about product and quality stan-
dards that pose a threat to the lives of consumers
or employees. However, Rossauw suggests that it
is not the role of the church to approve or
condemn economic systems. As economic
systems are morally ambiguous, he encourages
Christians to “keep a critical distance from the
economic system in which they are working.”
In contrast, because Islam supplies a practical
life-program, it is important to note that the
Islamic socio-economic system includes detailed
coverage of specific economic variables such as
interest, taxation, circulation of wealth, fair
trading, and consumption. Islamic law (shari’ah)
derived from the Qur’an and sunnah also
covers business relationships between buyers
and sellers, employers and employees and lenders
and borrowers (for full details, see for example,
Keller, 1994). Note that there is no difference
between Muslims and non-Muslims in legal
rulings concerning commercial dealings. For
example, it is unlawful to undercut another’s
price (whether that person be Muslim or non-
Muslim) during a stipulated option to cancel
period. A seller is not permitted to tell the
buyer “cancel the deal and I’ll sell you one
cheaper.” Also, whoever knows of a defect in an
article he/she is selling is obliged to disclose it,
to any buyer, Muslim or non-Muslim. Both
Islamic and non-Islamic employees must be
350 Gillian Rice

TABLE I
Examples of ethical principles in Islam relating to business practices

Ethical principle Relevant business practice(s)

Unity
“No Arab has superiority over any non-Arab and no non- Equal opportunity and non-discriminatory
Arab has any superiority over an Arab; no dark person has behavior in hiring, buying and selling.
superiority over a white person and no white person has any
superiority over a dark person. The criterion of honor in the
sight of God is righteousness and honest living.” Saying of
Muhammad (Sallam and Hanafy, 1988).

“O mankind! We created from you from a single (pair) of a Teamwork. International business.
male and a female, and made you into nations and tribes,
that you may know each other . . .” (Qur’an 49:13).

“. . . man can have nothing but what he strives for . . .” Rewards should be received only after
(Qur’an 53:39). expending efforts.

“God likes that when someone does anything, it must be Excellence and quality of work.
done perfectly well.” Saying of Muhammad (Sallam and
Hanafy, 1988).

“. . . say, ‘O my Lord! increase me in knowledge.’ ” Importance of knowledge-seeking, research

(Qur’an 20:114).
“The acquisition of knowledge is a duty incumbent on every
Muslim, male and female.” Saying of Muhammad (Sallam and
Hanafy, 1988).
and development, scientific activity,
training programs, executive training,
technology transfer.

Trusteeship
“God does command you to render back your trusts to those Fulfilling obligations and trust in business
to whom they are due . . .” (Qur’an 4:58) relationships and the workplace.

“. . . wear your beautiful apparel at every time and place of It is acceptable to have wealth and to
prayer: eat and drink: but waste not by excess . . .” consume but not to waste resources.
(Qur’an 7:31). Care for the environment.

“. . . to God belongs all that is in the heavens and on There is no unlimited right to private
earth . . .” (Qur’an 3:129). property.

Justice
“. . . God loves not the arrogant, the vainglorious (nor) those Prohibition of hoarding. Encouragement of
who are niggardly, enjoin niggardliness on others . . .” spending, investment in business enterprise
(Qur’an 4:36–7). and circulation of wealth.

“. . . and spend of your substance in the cause of God, and Condemnation of ostentatious consumption.
make not your own hands contribute to your destruction;
but do good . . .” (Qur’an 2:195).
 Islamic Ethics 351

Table I (continued)

Ethical principle Relevant business practice(s)

Justice continued. . . .
“. . . wealth and children are allurements of the life of this Acquisition of wealth is given reduced
world . . .” (Qur’an 18:46). consideration in the scale of human values.

“. . . He has raised you in ranks, some above others: that He Income inequality is permitted.
may try you in the gifts that He has given you” (Qur’an 6:165).

“. . . it is We (God) who portion out between them their Distinction between managers, workers,
livelihood in the life of this world: and We raise some of professionals, etc. is acceptable.
them in ranks so that some may command work of others.
But the Mercy of your Lord is better than the (wealth)
which they amass.” (Qur’an 43:32).

“. . . of their wealth take alms, so that you might purify and Income redistribution: wealth should be
sanctify . . .” (Qur’an 9:103). shared with those less fortunate.

“God permits trade but forbids usurious gain*.” Unlawfulness of loans by which lender
(Qur’an 2:275). obtains benefit.

“. . . give just measure and weight, nor withhold from the Give full measure and weight.
people the things that are their due . . .” (Qur’an 11:85).

“He who cheats is not one of us.” Saying of Muhammad Whoever knows of a defect in something is
(Keller, 1994). obliged to disclose it.

“. . . don’t outbid one another in order to raise the price, Fairness in contract negotiation.
. . . don’t enter into a transaction when others have already
entered into that transaction and be as brothers one to
another.” Saying of Muhammad (Hanafy and Sallam, 1988).

“. . . make your utterance straightforward . . .” (Qur’an 33:70). Truthfulness and directness in negotiation.

“On the day of judgment, the honest Muslim merchant

will stand side by side with the martyrs.” Saying of
Muhammad (Ali, 1992).

“. . . stand out firmly for justice, as witnesses to God, even Non-discriminatory workplace practices.
against yourselves, or your parents, or your kin, and whether Protection for “whistle-blowers.” No
it be (against) rich and poor.” special privileges for those with wealth or
status.

“. . . nor shall We (God) deprive them (of the fruit) of aught Importance of individual responsibility.
of their works: (yet) is each individual in pledge for his deeds.”
(Qur’an 52:21).

* In the Qur’an, the Arabic word used is “riba” which lexically means “increment” (Keller, 1994).
352 Gillian Rice
treated with the same just, equitable and honest
approach.
Note that Islam is not an ascetic religion. Islam
allows people to satisfy all their needs and to go
beyond. The objective should not be to create
a monotonous uniformity in Muslim society.
Simplicity in consumption can be attained in
lifestyles alongside creativity and diversity.
Neither does Islam mean an absence of economic
liberalization. There is a different kind of liber-
alization: one in which all private and public
sector economic decisions are first passed
through the filter of moral values before they are
made subject to the discipline of the market.
Undoubtedly, to implement the “moral filter”
in practice requires the dedication of a large
number of market participants. There is there-
fore frequently a wide gap between the philos-
ophy and practice of Islamic ethics in countries
with predominantly Muslim populations. The
next section examines this issue with reference
to Egypt.
Philosophy and practice: the example of
Egypt
The reality of present-day Muslim life is far from
the ideal possibilities given in the religious teach-
ings of Islam (Asad, 1993). Because of a number
of historical factors, the dominant ideology in
Muslim countries is not Islam but rather secu-
larism along with a mixture of feudalism, capi-
talism and socialism (Chapra, 1992). Islam is
conspicuous by its absence, particularly in the
political and economic fields. In the Muslim
countries, unjust and oppressive political and
socio-economic systems have been the cause of
the Islamic resurgence. The socio-economic
restructuring that Islam represents threatens the
governments’ short-term (but not necessarily
long-term) interests.
Impact of economic liberalization
For one dimension of life such as business, it is
difficult to differentiate between the impact of
the religious context of the behavior and the total
cultural system (Moore and Delener, 1986).
Egyptians are a religious people closely attached
to their religious culture and identity. There is a
growing awareness among them that many
Islamic cultural traits are being superseded by
western values, institutions and practices (Najjar,
1992; Asad, 1993). Joy and Ross (1989) observe
how, today, societal success in the third world is
measured and evaluated in terms of proximity
to the institutions and values of the west.
Nevertheless, new techniques, ideas and values
will be accepted only if they meet the real needs
of people more effectively than existing ones.
Had such institutions such as liberal democracy,
capitalism or socialism succeeded in solving the
pressing problems of Egyptian society, they
probably would not have generated such hostility
(Najjar, 1992). Instead, they have been seen as
the cause of rapid deterioration of the quality of
Islamic life and the decline of the Muslim world.
The emphasis on conspicuous consumption and
changes in lifestyles which followed Sadat’s
“infitah” (open-door) economic policy and move
to a free market economy in the seventies and
eighties aggravated inflation and unemployment
in Egypt, sharpened social disparities and
enlarged the class of dispossessed and disaffected.
The economic liberalization policy concentrated
on trade, the importance of consumer items and
expansion of services such as tourism and hotel
management (Tuma, 1988), rather than on indus-
trial projects. Privatization efforts continue,
although rather slowly because of the govern-
ment’s philosophy of control. A “new class” has
arisen as a result of the open-door policy.
Although it is relatively small, it accumulated
much economic and political power during the
eighties ( Jabber, 1986). This class consists mainly
of entrepreneurs, professional and high salaried
employees of the private economy.
Cultural dualism
The artificial symbiosis of Islamic ethical beliefs
and “alien” socio-economic philosophies and
systems has led to the emergence of bifurcated
societies promoting schizophrenic behavior both
at the individual and collective level (Naqvi,
 Islamic Ethics
1981). Ali (1992) discusses the Arab dual identity
in detail, attributing it to two main factors: (1)
colonialism which instilled feelings of inferiority
in Arab thought and (2) the artificial division of
lands into nation-states. The influx of multina-
tional corporations into the region also con-
tributed to cultural and social alienation. Because
of social and political instability in countries like
Egypt, people tend to believe everything in life
is temporary and they make their way on doubt.
Previous studies (for example, Rawwas et al.,
1994; Al-Khatib et al., 1994) suggest that social
and political instability or economic hardship
may cause tense, pessimistic and struggling indi-
viduals to sacrifice ethicality for basic survival
needs. In particular, Tuma (1988) identifies
three main features of Egyptian culture which
Egyptians have internalized in their behavior to
enable them to deal with the difficulties of life
in Egyptian society. These three features are inde-
cision, procrastination and indifference. People
will not firmly answer yes or no to a request,
but will say “insha’Allah (God willing). They will
not do today what they can do tomorrow, but
will say “bukra” (tomorrow), as if time had no
cost. They accept indecision and procrastination
and their effects with apparent indifference, and
say “ma’alesh” (it doesn’t matter), even though
the costs may be substantial.
If God’s name is invoked in every situation and
if every action depends on the will of a higher
authority, Tuma (1988) asks, what role does the
individual play? What responsibility must he or
she carry? It is important to note that Muslims
are exhorted in the Qur’an never to say that they
will do something the next day without also
saying “insha’Allah.” This does not absolve the
individual of responsibility; people should make
strong effort and work hard to achieve their
business plans. If these go awry, in hindsight, a
Muslim would consider this to be the will of
God. This may be viewed as “predestination in
reverse.” Yet there is no concept of predestina-
tion in terms of the future as humans have free
will and must make their own conscious life (and
business) decisions. As Eaton (1994) explains, the
concept of the divine omniscience would be
empty if humans did not acknowledge that God
knows not only all that has ever happened but
353
also all that will ever happen, and that “the
‘future’ is therefore in a certain sense, already
‘past.’ ” In the words of the Bible, “That which
hath been is now; and that which is to be hath
already been” (Ecclesiastes, 3:15). Since humans
are subject to time and cannot see the future,
they have an experience of free choice. They
make their choices and act accordingly; only
when the act is past can they say “it was written”
or “it was decreed for us from the beginning of
time” (Eaton, 1994). The Qur’an states that a
person achieves only that for which he makes an
effort: “. . . And that man can have nothing but
what he does (good or bad) . . .” (Qur’an 53:39).
With respect to “insha’Allah,” there appears
to be a tension between the Qur’an’s teaching
and what sometimes occurs in practice. Tuma
(1988) suggests that, in practice, the deference to
a higher authority may be understood to mean
“if the boss wills it.” If no-one will make deci-
sions, then no-one will bear responsibility.
Individual initiative is therefore reduced, as all
decisions are centralized, as a way of avoiding
responsibility and blame. Based on this author’s
experiences in Egyptian society, the term
“insha’Allah” is also often used as a way of
meaning “no” without actually saying “no.” It is
difficult to obtain firm commitment from
business partners and to plan accordingly.
Al-Khatib et al. (1995) provide the following
explanation for this type of behavior: one ethical
standard is used to handle daily decisions while
the other, influenced by religious teachings, is
not implementable because of the economic
hardship faced by the people.
Informality in business relationships
Social relations, the traditional extended family
structure and nepotism have a strong influence
on business behavior. Egyptians prefer to do
business with people they know and like and
who they consider as friends. They are extremely
hospitable and generous and exchange gifts often.
As business relationships are often with friends or
family, these relationships are characterized by
informality which is subsequently reflected in the
treatment of time, weights and measures, and
354 Gillian Rice
quality control of goods and services (Tuma,
1988). Table I includes several Islamic ethical
principles which counter this informality. For
example, there should be no discrimination
between human beings, whether they are family
members or not, full measure and full weight
should always be given to buyers, along with
explanation of any deficiencies in products to be
sold, and hard work and excellence or quality in
work is urged.
Implications for doing business with people
in Muslim cultures: the case of Egypt
The bifurcated nature of the Egyptian culture
creates some interesting problems for foreign
executives doing business in Egypt. On the one
hand, it might be useful for a foreign executive
to understand and show appreciation for the
Islamic concepts of unity (unity of faith and
action, equality of humans), trusteeship and
justice. On the other hand, managers must
consider the difficult realities of everyday living
which lead people to forgo the ethical princi-
ples of the Islamic tradition.
Can managers of multinationals play the role
of “moral champions” as Amine (1996) suggests?
About sixty percent of multinationals have codes
of ethics in place (The Economist, 1995). Many
managers ignore ethical diversity, however, and
implement the same code of ethics around the
world. Vasquez-Parraga and Kara (1995) argue
that codes of ethics have not worked. Some
contend that ethics cannot be taught to managers
because their values are already formed. There
are, however, numerous documented cases that
show ethics can be influenced by organizational
pressures (Smith and Quelch, 1992). Rogers et
al. (1995) state that, especially in developing
countries like Egypt, managers should develop
and implement a balanced business philosophy
which integrates the profitability requirements of
multinationals with the social, economic and
ecological needs of developing countries and
those who live in them.
For example, the U.K.-based retail outlet
“Egyptian House” is a joint venture with Egypt’s
Foundation for the Productive Families, a gov-
ernment-funded cooperative set up to make
needy Egyptian families self-sufficient (Thomas,
1996a). A non-profit U.S.-based cooperative,
“Women’s Organization Middle East Network”
(WOMEN), unites women from Egypt, Israel,
Jordan and Palestine. Its goals include training
women in management, technology, finance and
marketing techniques, as well as promoting social
services. Products are to be marketed regionally
and internationally, with the ultimate aim of
developing a franchise system (Thomas, 1995).
Niclas, a German clothing retailer is opening a
large number of outlets in the Middle East, with
plans to locate production as well as retail outlets
in Egypt. It can be argued that Niclas is pro-
moting fashion and “luxurious” clothing items.
Nevertheless, the company’s plans to promote
brand loyalty also include starting a children’s
club led by eco-friendly character “Niclas” who
will give talks about nature and ecology. Niclas
has a regional partner to assure regional adapta-
tion of business approaches (Thomas, 1996b).
There is undoubtedly a need for genuine
understanding of the ethics of foreigners with
whom an international manager seeks to do
business, whether these are other businesspeople,
consumers or government representatives. In
each particular culture, this understanding should
extend to people’s aspirational ethics as well as to
their everyday practices. Managers should not
look merely at the practices of the most corrupt
level of society (Tuma, 1988; Al-Khatib et al.,
1995).
The foregoing discussion of Islamic philosophy
and practice in Egypt suggests a number of impli-
cations for international executives. These are
detailed in Table II. The Egyptian culture, based
in the Islamic tradition, focuses on social issues
such as family, health and training for young
people. Marketing and public relations efforts
must therefore emphasize these issues (Wilkinson,
1996). For example, Egyptian House is planning
to sponsor Egyptian students on annual place-
ments to learn marketing techniques. In the tele-
phone switching market, European firms have
strengthened their position in Egypt by visiting
agents more frequently and educating their agents
regarding new technology. Such efforts have led
to closer, more successful business relationships

Illustrations of the business implications of Islamic philosophy and practice in Egypt
Islamic philosophy
Unity
Non-discrimination in the
workplace
Importance of knowledge-seeking
Trusteeship
Care of the environment
Use of wealth for social causes,
to aid less fortunate people.
Justice
Precision in business dealings,
honesty, full information to the
buyer, etc. Individual
responsibility.
Prohibition of usurious
transactions e.g. payment and
receipt of interest.
Islamic Ethics
TABLE II
Egyptian practice
Nepotism, importance of social
relationships in business
Egyptians place great emphasis on
education, wherever possible,
given the country’s level of
economic development.
Egyptians have neglected this, in
part because of more pressing
economic problems, but also
because of attitude. Changes are
occurring. Environmental laws
being implemented.
The “new” class which benefited
from liberalization tends to engage
in conspicuous consumption.
Yet, there are also efforts on
the part of some Islamists to
develop social welfare programs.
Informality in treatment of time,
weights and measures, business
on a “handshake.” Indecision,
procrastination. Lack of trust.
Efforts to gain benefits from the
state.
Some Egyptian businesspeople
observe this ruling; others do
not.
355
Implications for the foreign executive
Trust and friendship must be
developed, often slowly, before
business is possible. Hiring of
family members/friends by
Egyptian partner may result in
less than qualified individuals
for certain positions.
Provide training as part of contracts;
technology transfer; visits to foreign
company’s home facilities much
appreciated.
Business opportunities in
environmental technology field.
Marketing appeals could be made
using the Islamic perspective on the
environment.
International managers have the
opportunity to be “moral
champions.” E.g. success of Egyptian
House in UK, a joint venture with
Egypt’s Foundation for the
Productive Families (Thomas,
1996a). Also, possibilities for
cause-related marketing in Egypt.
Foreign executives need to be
extremely patient and cautious.
Showing strong commitment,
however, will likely increase the
commitment of the Egyptian
partner. Need for local agent/
partner.
Need to find out the views of the
Egyptian partner. Foreign executives
would be wise to avoid expressing
opinions, but should follow desires of
Egyptian partner. Opportunity for
innovative financing methods. Islamic
financing institutions and instruments
growing worldwide with many major
western banks involved.
356 Gillian Rice
(Middle East Executive Reports, 1995). Innovative
financing methods based on Islamic practice are
growing worldwide and are accessible to western
business executives. For example, Citibank’s
Islamic investment bank is headquartered in
Bahrain. The Islamic Development Bank has an
export credit agency, The Islamic Corporation
for the Insurance of Investment and Export
Credit (Middle East Economic Digest, 1995).
While there are some differences between phi-
losophy and practice, it should be remembered
that the Islamic worldview has an enduring and
strong influence on Egyptian culture. In common
with most peoples of the world, Egyptians are
very favorably impressed and honored by a for-
eigner’s genuine desire to learn about the ideal
to which they aspire. An understanding of
Egyptians’ inner conflicts in business ethics will
be appreciated. At all times, foreign executives
should demonstrate respect for Islam and they
will find that, in turn, the Egyptians will truly
respect the foreigners’ religious beliefs and ethical
ideals.
Conclusion
In response to the need for further research and
discussion about business ethics in different
cultures, I have described Islamic philosophy
regarding business practices. It is important not
merely to understand the philosophy or ideal,
however. Knowledge of ethics in practice is vital
to the international manager. The illustration of
Egypt shows considerable diversities between
philosophy and practice; diversities which if
understood, can provide a foreign executive with
ideas on how to negotiate with Egyptians and
even what kinds of products or services might
be appreciated. The specific Egyptian case, of
course, has limited generalizability, as all cultures
have unique traits. Nevertheless, the analytical
framework I use is applicable in any culture.
Managers should examine first a culture’s ideal
set of ethics, and second, the actual ethical
practice. They should also attempt to investigate
reasons for differences between these two.
Future empirical research could focus on what
are the ethical issues of most concern to Muslim
managers and how these managers deal with
issues of social responsibility in their countries.
The results would be salient in the development
and implementation of multinational companies’
codes of ethics. In addition, organizations seeking
to be “good corporate citizens” in Muslim coun-
tries could benefit from this kind of research.
Because much international business is conducted
using agents and various types of joint ventures,
it is important to understand the ethical ideals
and practices of Muslim business partners. Also,
how do they resolve conflicts with non-Muslim
partners? Research should include comparisons
of different Muslim countries, such as those from
North Africa, the Gulf region, and Southeast
Asia. Furthermore, what is the impact of Islamic
thinking on different business functions such as
finance and marketing? For example, what kind
of advertising is not only acceptable in Islamic
cultures, but is preferred and more effective? The
most appropriate way to research these issues is
by conducting surveys to ascertain the attitudes
and practices of managers and consumers in
Muslim countries. In some contexts, such as
advertising research, laboratory and field exper-
iments may also be feasible.
The Islamic ideal is part of a universal Islamic
culture, common to all Muslims around the
world. Hence, a deeper appreciation of Islam
can be advantageous to executives conducting
business with any Muslims, from Indonesia to
Morocco, and from the former Soviet Central
Asian republics to South Africa.
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