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Toward Applied Islamic Business Ethics: Responsible Halal Business
Toward Applied Islamic Business Ethics: Responsible Halal Business
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Abstract
Purpose – The purpose of this paper is to explore the opportunities of using halal regulation and
certification as a mechanism for applying Islamic business ethics in contemporary world.
Design/methodology/approach – The current practices of halal regulation and certification and
literature on Islamic ethics were reviewed, to identify a practical approach for Islamic business ethics.
Findings – Islam allows and accepts different levels of ethical commitment. A multi-level Islamic
ethics framework and a multi-level halal certification approach are proposed to facilitate the
implementation of Islamic business ethics in a relative context. Two major developments can enrich
halal business practices: harmonization of global standards and governance structure, and integrating
responsibility and ethical issues in halal standards.
Practical implications – The proposed framework and developments can enrich halal regulation
and certification practice.
Originality/value – The paper emphasizes the importance of flexibility and adaptability in Islamic
business ethics implementation, and proposes a new framework and approach to apply Islamic
business ethics.
Keywords Islam, Business ethics, Social responsibility, Corporate governance, Islamic ethics, Halal,
Corporate responsibility
Paper type Research paper
Introduction
Despite (or maybe because of) the advancements in science and technology, humanity
is facing serious challenges that cannot be resolved without effective ethical systems.
During centuries of human intellectual activities, ethics and morality was a preferred
area of debate for philosophers. Most of the philosophic debate was normative in
nature, which means it was tried to identify, what humans should do, or in other words:
what is right and what is wrong? What are the best rules to guide ethical judgment?
In order to develop and take roots, normative ethics – especially business ethics – need
to be applied practically. Only by application they can be tested, criticized and emerged
continuously. Business ethics researchers need to pay more attention to applied ethics
in addition to their interest in normative ethics. “The business ethicists also have to
develop ways of applying their ideas in concrete practices. The current situation of
injustice – intra- as well as intergenerational – is simply so serious that we ought not to
Journal of Management Development
Vol. 31 No. 10, 2012
understand business ethics merely as intellectual endeavor of moral reasoning”
pp. 1090-1100 (Beschorner, 2006).
r Emerald Group Publishing Limited
0262-1711
Social institutions bear great importance in the application of business ethics.
DOI 10.1108/02621711211281889 International organizations, NGOs, business associations and regulating bodies are
examples of social institutions which play an essential role in applying business Islamic business
ethics through mechanisms like regulation, certification, disclosure, media ethics
coverage, advocacy, codes of ethics and other mechanisms. Social institutions
provide enforcement, socialization and incentives (Possumah et al., 2012) that influence
individuals and organizations to adhere to ethical standards in their business activities.
To contribute to the advancements of business ethics theory and practice, academic
research need to focus on the effectiveness of current social institutions and 1091
mechanisms in applying business ethics and on how they can be improved.
This paper aims to contribute to research in business ethics application, by
analyzing one of the contemporary mechanisms of applying business ethics. The paper
will focus on Islamic business ethics and discuss its application using the example
of Halal regulation and certification.
1092
. harm is not to be inflicted nor reciprocated in Islam;
. harm is eliminated to the extent that is possible;
. harm is not eliminated by another harm;
. preventing harm is given preference over gaining benefit; and
. public interest takes precedence over personal interest.
Usol Al-Fiqh methodology and its maxims can be used to answer contemporary
ethical issues. However, effective application of this methodology needs a solid
understanding and awareness of different elements and forces affecting the relevant
issue. Abdallah (2010) presented a practical example of applying these maxims to a
very contemporary ethical issue: information security and privacy.
31,10
International level AAOIFI, IIFM, IFSB
Figure 1.
Governance structure
of Halal regulation Consulting, auditing and Consulting, auditing and
Shari’a supervisory
boards, consulting and
and certification Micro level rating companies certification companies auditing firms,Shari’a
advisors
Responsible Halal Overall company strategies and management processes meet and may
business exceed Halal responsibility standards
Responsible Halal The product meets Halal and responsibility standards
product Examples:
Organic and Halal product
Shari’a compliant investment in environmental – friendly technologies
Halal product The product meets basic Halal standards
Examples: Table II.
Meat slaughtered according to Shari’a rules Multi-level Halal
Interest free financial products certification
Conclusion
Halal regulation and certification forms a good mechanism in order to help Muslims in
meeting their religious commitments while living in a globalized and diversified
society. Halal business practices vary from one country and industry to another, this
variation is due to the differences in the reliability and functionality of institutions
and governance structure in those countries and industries. Halal regulation and
certification can be developed by integrating some proven tools from the domain of
CSR and by including ethics and responsibility criteria with Halal standards. This can
be achieved through a multi-level approach that provides Muslims with information
on products and businesses covering ethical and responsibility criteria, in addition to
the basic Halal standards.
More research – especially empirical research – is needed to understand, and hence
develop Islamic business ethics application and Halal business practices.
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