Chapter 7: Organizational culture and

managing change and innovation

Dr. Ahmad Rafiki and Dr. Sutan Emir Hidayat 1
Organizational culture has become a hot topic within management discipline for many years. Islam
being a comprehensive way of life creates cultures and not a product of a specific culture.
Understanding organizational culture from an Islamic perspective aims to achieve the ultimate success
(falah). Islam promotes continuous improvement and in order to realize it, performance, knowledge
creation, change management, ethics, leadership and organizational commitment are essential. The
application of Islamic organizational culture within the organization is vital to achieve falah. Islamic
culture has specific distinct prominent features. In addition, it also has a unique model which is
different from other models. Its application will surely affect the organization’s performance in
different ways. The Islamic organizational culture also has a significant relationship with knowledge
creation capability, organizational change, work ethics and leadership. Therefore, it is very important
to discuss all those topics related to organizational culture. This chapter presents the above two
important topics in details to offer readers with an alternative perspective.

LEARNING OUTCOMES
LO1 Understand the importance of organization culture in Islamic perspective
LO2 Identify the impact of Islamic rules and culture to enhance firm performance, knowledge
creation and organizational change
LO3 Understand the role of ethics, leadership, organizational commitment to create improvement
and have better performance.
LO4 Explain how Islam promotes creativity to support organizations success

CHAPTER OUTLINE
1. Introduction -------------------------------------------------------------------------------------------------------- 2
2. Culture and Organizational Culture ---------------------------------------------------------------------------- 2
2.1 A Culture ------------------------------------------------------------------------------------------------------- 2
2.2 Organizational Culture --------------------------------------------------------------------------------------- 3
3. Application of Islamic Organizational Culture --------------------------------------------------------------- 4
3.1 Islamic Culture: The Prominent Features ----------------------------------------------------------------- 4
3.2 The Concept of Islamic Organizational Culture -------------------------------------------------------- 10
3.2.1 The Islamic Organizational Culture Model -------------------------------------------------------- 11
3.3 Organizational Culture and Firm Performance---------------------------------------------------------- 12
3.4 Organizational Culture and Knowledge Creation Capability ----------------------------------------- 15
3.5 Organizational Culture and Organizational Change---------------------------------------------------- 16
4. Work Ethics, Leadership and Organizational Culture ------------------------------------------------------ 17
4.1 Islamic Work Ethics and Organizational Culture ------------------------------------------------------- 17
3.2 Leadership and Organizational Committment ---------------------------------------------------------- 19
Summary----------------------------------------------------------------------------------------------------------- 23
Chapter Highlights ----------------------------------------------------------------------------------------------- 23

1
University College of Bahrain, Manama, Kingdom of Bahrain, Email: hahmadrafiki@gmail.com and
sutan@ucb.edu.bh
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 End of Chapter Questions --------------------------------------------------------------------------------------- 24
Model Answer for the end of chapter Questions ------------------------------------------------------------ 24
Discussion Questions -------------------------------------------------------------------------------------------- 25
Cases --------------------------------------------------------------------------------------------------------------- 26
On-line Resources ------------------------------------------------------------------------------------------------ 28
Abbreviation ------------------------------------------------------------------------------------------------------ 29
Glossary of Islamic Business Terms -------------------------------------------------------------------------- 29
Selected Bibliography ------------------------------------------------------------------------------------------- 30

1. Introduction
The discussion of culture is widespread in many organizations applied by employees or other
stakeholders in their respective institutions. Culture is an abstraction created and derived by the social
and environmental situations that must be understood comprehensively. The idea of a ‘Culture’ is
actually a metaphor. It is an image or understanding that is symbolic of something that we can’t
actually access directly. In fact, the culture of an organisation is the inferred and invisible curriculum
and customs of that group of people.

The managers usually find resistance when changing the behaviors of their subordinates especially
those cross the line from the rules of an organization. Most of the time, the managers monitor the
activities of their subordinates who are always involved in conflicts more than ensuring the tasks are
completed. There is miscommunication or misinterpretation of information that make the members of
groups acted beyond their habits. Many reminders and explanations are given to avoid similar things
happened but without the positive consciousness, things never shifted. This was a common incident
faced by many organizations.

In the environment where tensions always occur, the leaders are aware of the importance of finding
the effective ways in running the organizations. In this situation, some individuals and groups still
keep on doing ineffective things, and endanger the viability of the organization. Meanwhile, some
groups couldn’t accomplish their jobs without implicating other groups. As a result,
miscommunications occur between them and thus result in conflicts within the organization. These
are among the stories or obstacles the leaders have noticed in many occasions.

2. Culture and Organizational Culture

2.1 A Culture
The term of a culture is widely used in social sciences, for example psychology, sociology,
anthropology etc., which has different definitions in each of those fields. Earlier this term is defined as
value orientations (Kluckhohn and Strodtbeck, 1961) and predictions of common human problems
(Inkeles and Levison, 1969). It is also as a way of life of a group of people that develops and inherents
by generations. Hotstede (1991) mentioned that the culture exists in many interactions which
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influence other people in their surrounding and comprises of many complex assumption, behaviour,
stories. The culture covers a complete meanings and can be interpreted in several perspectives which
consists of some key characteristics as follows (Spencer-Oatey, 2012):
i. Culture is manifested at different layers of depth;
ii. Culture affects behaviour and interpretations of behaviour;
iii. Culture can be differentiated from both universal human nature and unique individual
personality;
iv. Culture influences biological processes;
v. Culture is associated with social groups;
vi. Culture is both individual and social constructs;
vii. Culture is always both socially and psychologically distributed in a group;
viii. Culture has both universal (etic) and distinctive (emic) elements;
ix. Culture is learned;
x. Culture is subject to gradual change;
xi. Culture has interrelated parts;
xii. Culture is a descriptive not an evaluative concept.

2.2 Organizational Culture

There are authors had defined the organizational culture. Schein (1985: 9) clearly has described that
an organisational culture as a pattern of basic assumptions invented, discovered or developed by a
group of people which are learned when adapting external and integrating internal problems that
successfully implemented. The new members of an organization need to be taught the right way to
perceive, think, and feel in association with those problems. They should adapt the behaviors within
the organization and follow its belief system. These new and adaptive behaviours can be shaped
through values and norms which are related to the rituals, myths and symbols in creation the
organisational culture (Hofstede 1991).

Meanwhile Arnold (2005: 625) mentioned that an organizational culture consists of distinctive norms,
beliefs, principles and ways of behaving which considered as distinct characters of an organisation. It
is agreed that the organization culture as a system, a set of opinions or beliefs which are shared by
members, that distinguish an organisation from other organisations (Shahin and Wright, 2004; Schein,
1985; Robbins, 2001; Martins and Martins, 2003: 380). Robbins (1990) added that an organizational
culture is often interpreted as a foundation of philosophy that provides direction for organizational
policies in managing employees and finance. Moreover, it is an asset that could be managed to
improve business performance.

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In details, Harrison and Stokes (1992) explained the four dimensions of organisational culture as
follows:
▪ Power dimension: this refers to the inequality of access to resources. Means that the
organizational culture emerged from a single source of power which then able to persuade
throughout the organization. A centralized power and a connected organizational members
are created by functional and specialist ropes.
▪ Role dimension: This type of culture refers to the job description and specialization. The
procedures and rules are created to control the works that underlie the job description, which
is more imperative than the person who sits in the position.
▪ Achievement dimension: This called as a task culture, which requires organizational members
focusing on achieving the set purpose and goals of the organization. The aim is to bring the
right people together, in order to attain organizational goals.
▪ Support dimension: This refers to an organizational atmosphere that is based on mutual trust
between the individual and the organization. A support-oriented organization exists solely for
the individuals who support it, and may be represented by a group with no one dominates.

The organization culture is importantly considered as a vital element in any type of organization. It
associated with economic performance (Denison, 1990; Kotter and Heskett, 1992; Sorensen, 2002),
related to public service improvement (Boyne, 2003), facilitated institutional transformation (Zalami,
2005), facilitated innovative initiatives (O’Donnell, 2006: 98), developed career progression and
development of staff (O’Riordan, 2004).

O’ Donnell and Boyle (2008) added that understanding of organizational culture and cultural types
will help the understanding of why managerial reforms may impact differently within and between
organizations. They stated that an organization with a predominantly internal process culture, may be
more resistant to reforms aimed at promoting innovation.

3. Application of Islamic Organizational Culture

3.1 Islamic Culture: The Prominent Features
The Islamic culture derives from values, norms, thoughts and symbols based on Al-Qur’an and hadith
which influence the behaviour, attitude and habit of someone in a certain walks of life. Islamic
teaching combined between the culture and profession. The Islamic culture that learned by employees
is related to working environment and will improve the quality and capacity of any professions. There
are some features of Islamic culture that are elaborated below:
a. Putting trust in Allah

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There is a term known as Tawakul which means that every Muslims employees or employers should
submit and depend themselves on Allah (God) in all their worldly affairs including the organizational
related matters. Allah will help His servant if they are following the Islamic teachings accordingly.
Trust makes the works can optimally be done.

b. Missionary spirit
The mission of Muslims differs from the non-Muslims. The main mission of the Prophet Muhammad
(PBUH) is to complete the akhlaq (ethics) of the people. Similarly, for every Muslim, they have
mission to invite and influence the people through da’wah (sermons) to accept Islam as a belief and
the ultimate truth religion.

A missionary spirit is a good deed for every Muslims. This spirit makes the Muslims become sincere
and enthusiastic in performing any activities within an organization. As a result, they could deny the
individual interests and help in glorifying the performance of the organisation. With better
performance, it makes the organization superior than the competitors which will give more
advantages to the employees indirectly.

A missionary spirit encourages a person to work closer with the peers, subordinates, and top
management than before. With a mission, the Muslims will be more confidence, self-motivated and
precise in doing any tasks, and further they never stop to make their organizations achieve an
excellent position.

c. Honesty and truthfulness

A Muslim should be honest and truthful both internally and externally, individually and collectively,
privately and publicly (Ather, 2007).The honesty makes the Muslim convinced tohim/herself in terms
of behaviour, words and deeds.This mutual confidence makes the believer feel self-satisfied and
socially secured. Honesty leads the individuals to think that he trusts others and is trusted by others.
Honesty means unity of behaviour, unity of standards, and integrity of personality. Honesty means to
prevent from internal oppositions, social conflicts, and self-contrariety. In a Hadith, the Prophet
(PBUH) said “Truthfulness leads to righteousness, and righteousness leads to paradise. A man
continued to tell the truth until he becomes a truthful person. Falsehood leads to wickedness, and
wickedness leads to the hell, and a man may continue to tell lies till he is written before Allah, a liar”.

Islam has encouraged Muslims to be honest. The honesty importantly needs to be applied in an
organization. With honesty, a conducive organization’s environment is created, happiness among
employees is appeared and trust culture is spread.

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d. Accountability
Accountability is a significant feature of Islamic organizational culture. An organization is not well
performed in the absent of accountability and its members need to promote the accountability culture
(Altalib, 1991; Trad, 1998). Accountability refers to the duties or tasks of employees that must be
reported to the organization. In other words, the organization has the right to ask the
manager/supervisor on the matters they are doing. This accountability relates to the worldly affairs
including businesses and the hereafter (Day of Judgment) where everyone needs to be responsible on
the things that they have done before; bad or good deeds. Allah (SWT) will give punishment or
reward accordingly. The Prophet Muhammad (PBUH) said, “Surely, all of you are responsible and
will be questioned about your responsibilities”.

e. Consultative decision making

A consultation is needed to get advice from those who have knowledge and are the experts on certain
subjects. An example has been practiced by the Prophet Muhammad (PBUH) whereby he frequently
consulted his companions for all imperative things. In other words, the Prophet (PBUH) took many
decisions after companions’ opinions and inputs are carefully listened (Syed, 2002). This consultative
decision making must be implemented in all organizations. This process will enhance the quality of
decisions and create trust among the employees. A good decision gives an inspiration to the
employees in performing their tasks. Islam clearly prohibits the egoism which is an opposite of
consultative culture (Ather, 2007).

f. Doing good and prohibiting wrong practices

Muslims should always perform good deeds and evade all types of nasty practices. Rewarding the
best deeds and punishing the nasty deeds are the one of the societal principles in Islam. An
organization has the capacity to shape a good surrounding.

g. Absolute sincerity
In many of today’s organisations, people do not bring their souls to work but merely carry their arms
and brains (Mitroff, 2003). As a result,many organisations couldn’t find the genuine talents and full
creativity employees. Thus, employees do not succeed in advancing themselves as holistic human
beings (Rego et al., 2007). However, the employees and employers in an Islamic organisation should
work with absolute sincerity for the blessings of Allah (SWT) and organization’s growth. The Prophet
Muhammad (PBUH) said “Actions are only judged by the intention, and every man shall only have
what he intended. Thus, hewhose Hijra was for the sake of Allah and his messenger, and he whose
Hijra was to achievesome worldly benefitor to take some woman in marriage, his Hijra was for that
for which he made Hijra”.

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The Hadith elaborates that the good intention is importantly needed in order for the actions to be
accepted by Allah (SWT), i.e. truly for the sake of Allah (SWT). This is called ikhlas in Islamic
teaching or an absolute sincerity which means to ensure that every worship or affair is performed
solely for the sake of Allah (SWT) and to gain His pleasure (rida). It is also known as a condition of
acceptance on the performed deeds which give happiness to everyone who are applying it.

The managers in Islamic organizations are highly required to understand the Al-Qur’an and Sunnah as
references in life. It is important to note that they must understand both of them with knowledge. This
includes knowing about Islamic principles and compliances. Every Muslim is encouraged to improve
his/her skills and increase knowledge as always been reminded by the Prophet Muhammad (PBUH).
The humbleness of man is created with the excellence in his knowledge and it will help him to
explore more knowledge. With knowledge, the employees could differentiate what is wrong from
what is right.

i. Good behaviour
Doing good behavior is a very meaningful of cultural trait for a Muslim. With good behavior, the
opponent can be new friend and others can give their respect, even the people with immense
knowledge will not be appreciated without good behavior. Good behavior brings positive impacts and
costs nothing. In an organization, the work motivation and interpersonal relationships are well created
through the actions of managers. Thus the managers must behave rightly to their subordinates. The
Prophet Muhammad (PBUH) said “All creations are the family of Allah and who well behave with
the family of Allah is most likeable to Allah”.

j. Justices
Justice is synonymous with the equality. Both of them are importantly useful in dealings with
different backgrounds of people. The Islamic organizational culture could be accepted through justice.
The Qur’an reminds Muslims in many verses to be fair and just in any affairs even if the decision goes
against their parents or themselves.

The Prophet Muhammad (PBUH) carries out the instructions of Allah (SWT) with justice, even to his
relatives, for instance as he said; “If mydaughter Fatimah had been guilty, she would not be spared”
(Al-Bukhari, 1997, p. 409). Injustice creates conflict or disorder and brings negativity to any
relationships as the Prophet (PBUH) warned; “injustice is darkness in the hereafter” (An-Nawawi,
1993, p. 143), while justice results in the happiness. Perhaps, there is no another reason for managers
to ignore the implementation of justice particularly in an Islamic organization.

k. Cooperation
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Islam encourages every employee to cooperate each other. Cooperation is associated with doing
works in a team that lead to better results. It is an important shared culture to be learned in an Islamic
organization. Prophet Muhammad(PBUH) said that; “The best people among you are those who
benefit others”. The Prophet(PBUH) also reminded; “Allah shows no mercy to them who are not
merciful tothe people”.

l. Mutual Trust and Respect

Trust is related to respect and both are imperatively needed in an organization. Muslims must
advocate a trust and do not spread suspicious except having a proof (Sharfuddin, 1987). Infusing the
culture of mutual respect could create togetherness and solidarity among the employees. The Prophet
(PBUH) had taught his companions and said; “trust your brother and try to comeup with excuses for
him and justification for what he does even if he did it seventytimes”.

m. Sacrifice
The employees of the Islamic organisations are expected to adopt a culture of sacrifice, particularly
the managers, they should appear as someone with personal sacrifices. It is expected that the
employees will follow the managers by giving greater sacrifices than the managers. The Prophet
(PBUH) never took anything to gain himself or his family. This is followed by the attitudes shown by
the second Khaliph, Umar Ibn al-Khatab and the third Khaliph, Uthman Ibn ‘Afaan. The sacrificing
culture can contribute tothe development of a harmony and unity of various groups who are working
together in an organization.This will assist them in attaining the organization’s goals.

n. Physical health
The physical fitness of employees is very crucial and the Muslims have been reminded by the Prophet
Muhammad (PBUH) that said: “a strong believer is better than the believer who is weak in physical
strength”. The physical health of employees is associated with their ability to do the tasks. The sick
employees couldn’t accomplish their responsibilities as assigned. The Islamic organizations have to
ensure and accustom the employees to attend the physical exercises frequently as well as to maintain
their endurances for a certain period, thus redounding to the organization.

o. Neat and cleanliness

The appearance and personality of Muslims should be looking neatly and nicely. Allah (SWT) loves
Muslims who are physically presentable and highly concerned on the cleanliness.Prophet Muhammad
(PBUH) said, “cleanliness is half of faith”, thenthe Prophet (PBUH) also said, “All of Allah’s affairs
are beautiful, and He likes beauty.These also relate to the dressing matter. The employees are
encouraged to dress in Islamic way which can lessen problems in working place such as sexual
harassment and ascertain convenience working surroundings.
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p. Brotherly relations
Islam introduces a typical and glorious cultural concept of employee management relations.Every
Muslim is brother and should help each other. Islam incites to maintain the relationship while many
hadiths of the Prophet Muhammad (PBUH) reminded the importance of brotherhood, among others:

“When you meet him, salute him, when he calls you, respond to him, When he seeks advice,give him
advice, When he sneezes and praises Allah, respond to him, When he falls ill, visithim, When he dies,
follow him (the funeral bier)”.

q. Performing compulsory prayer

In an Islamic organisation, the rules of performing worships must be accommodated. For Muslims,
performing compulsory prayers (5 times daily) is an instruction from Allah (SWT).The Prophet
Muhammad (PBUH) saidthat prayer (salah) is “the best deed”. Prayer is so meaningful in the
Muslims’ life. One day, the Prophet Muhammad (PBUH) asked his companions, “Do you think that
dirt can remain on a person bathing five times a day in a brook running in front of his door?” “No”,
answered the companions, “No dirt can remain on his body”. Then the Prophet (PBUH) mentioned:
“So, exactly similar is the effect of Salah offered five times a day. With the grace of Allah, it washes
away all the sins”.

r. Forbidding libeling and slandering

Islam prohibits the libeling and slandering to everyone; Muslims or non-Muslims. These actions
spread hostility and create conflict among people including in the organization. Both can lessen the
good deeds and add the bad ones that generate to the embarrassment. The Islamic organizations have
to ensure to avoid these disgrace actions by their members.

Both libeling and slandering are strongly prohibited by Allah (SWT). The one who did these, it’s like
a person who eats the meat of his dead brother. The message is clearly mentioned that Muslims must
hate the slandering. In an organization, the libeling will create anger, doubt, jealously among the
members that ruin the working environment. Table 1 below summarizes the Islamic prominent
features based on Al Qur’an verses.

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 Table 1. Islamic Prominent Features based on Al Qur’an verses.

Prominent Features of Islamic Culture Al Qur’an verses

Keeping Trust on Allah Al Imran, 3:159
Ash Shura, 41:33;An Nahl, 16:125; Al Imran,
Missionary Spirit
3:104;Luqman, 31:32; Yusuf,12:108.

An Najm, 53:30;40-41, Ar Rad, 13:11; Al Hajj,22:41;

Hard working
Al Jumua, 62:10.
Absolute sincerity Al Bayyina, 98:5
Excellence Al Baqara, 2:148
Accountability Al Zalzala, 99:7-8
Consultative decision making Ash Shura, 42:38
Cultivating good and forbidding wrong practices Al Imran, 3:104; Luqman, 31:32; Yusuf, 12:108
Morality Al Qalam, 68:4; Al Ahzab, 33:21
Knowledge Fatir, 35:28; Al Furqan, 25:67
Justices An Nisa, 4:58;135
Mutual trust Al Hujraat, 49:6;12
Good behaviour Al Hujraat, 49:13; Al Baqara, 2:83
Mutual respect Al Hujraat, 49:13
Neat and cleanliness An Naba, 78:4-5; Al Araf,7:31
Physical soundness Al Qasas, 28:26, Al Baqara, 2:247
Al Anfal, 8:63; At Taubah, 9:71, Al Hujraat, 49:10; Al
Brotherly treatment of employees
Imran, 3:103
Offering compulsory prayer Al Hajj, 22:35; Al Ankaboot,29:45
Dressing Islamically An Noor, 24:30;30
Prohibiting backbiting and slandering Al Hujraat, 49:12
Source: Authors

3.2 The Concept of Islamic Organizational Culture

The Islamic organizational culture refers to a set of values, norms, thoughts and symbols based on Al-
Qur’an and hadith spread and accepted by the members of organization. The adopted Islamic culture
in organization may assists in disseminating vision, mission, philosophies, knowledge and skills
among the members. It is also helps the members of an organization in understanding the aims of an
organization, the standards and ways in which it runs, and the imperative affairs in order to achieve
the ultimate success (falah) and obtaining the pleasure (rida) of Allah (SWT). Hence there are two
differences of Islamic culture and other type of culture; the sources and objectives of culture.

The accepted Islamic culture of fairness, honesty, trust, hard working are related to the firm
performance of productivity and satisfactions. It is also associated with knowledge creation capability
and organizational changes which expected to create effectiveness and efficiency. Meanwhile, the
components of Islamic work ethics such as cooperation, consultation, helping others, equality and
unity are used to be the Isamic culture that have been admitted to have a conducive working
atmosphere.

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The Islamic culture in organization had shown by the success of Prophet Muhammad (PBUH) in
developing the working atmosphere conductively caused by his attitude of feeling pity to other people
(QS. 3: 159) and professionalism that had been taught in Islam of having full of commitment to work
very well and very hard (QS. 17: 84). This Islamic culture has a notable role in forming the behavior
of the organization’s members including the managers.

3.2.1 The Islamic Organizational Culture Model

There are four phases of creating an aspired organizational culture from the Islamic perspective
(Hoque et al., 2010). The descriptions of each phases are elaborated as follows:

▪ Initiatives of the founders of the organization

The Islamic organizational culture is created through initiatives taken by the founders. The founders
know what the organization should do based on the agreed vision (Robbins and Judge, 2009). The
organizational culture can’t be created firmly if the founders are deviated from the vision or unable to
undertake the right decision.

▪ Selecting the managers and operatives

The founder should choose the individuals that having similar thought with them (Robbins and Judge,
2009). To form a strong culture, the founders need not to tolerate with the agreed vision and qualities
at this stage. The founders could have their own preferences to find and recruit the individuals who
have competencies, skills and knowledge to do the tasks effectively and able to realize the vision of
the founders. In this stage, the adequate information must be given to the applicants concerning the
mission and vision of the organization. The candidates can learn about the organization, however, if
they found any disagreements with their own values, they can retract their applications. Having
through this, the selection process preserves the organization’s culture by choosing the individuals
who might suit or disagree with the organization’s values.

▪ Top Managers’ role

A major effect of the organizational culture derives from the decision of senior level managers
(Hambrick and Mason, 1984). The top level management disseminates an instruction related to the
organizational culture to all employees. The behaviors and actions of senior executives could form
values to the employees. The employees can learn on how the decisions are determined; to what
extent the managers give the freedom to their employees; what are suitable dresses; how is the
collaboration among employees; how works to be executed; what are updates on promotions, rewards,
punishments, job descriptions, responsibility, and other progresses (Robbins and Judge, 2009).

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 • Socialisation
This process is meant for new employees in adapting the organization’s culture (Rollag, 2004). The
success of this process depends on the process of recruiting and selecting employees conducted by the
organization. The new employees are not enforced to apply the new culture, but they need to learn and
adapt the culture gradually. The success of employees’ culture socialization also depends on the level
of perceived values of new employees and the top management preference on the socialization
method (Robbins and Judge, 2009).

▪ Feedback
The intended organizational culture cannot be created by one action but needs a feedback which will
be collected on time to time basis. The founders will monitor this process continuously. The feedback
is crucial in forming organizational culture from an Islamic perspective. It is acknowledged that the
intended organizational culture is the result of an integrated and continuous attempts initiated by the
top management and founders. Thus, an effective monitoring system is required to establish the
intended organizational culture from an Islamic perspective. After receiving the feedback, the
required actions should be done to eliminate the obstacles which blocked the forming of the intended
organizational culture.

3.3 Organizational Culture and Firm Performance

The organizational culture that relates to the firm performance through the attitude of hard working
and excellence orientation. These two things are crucially will boost the organizational performance.
The managers and employees must apply it into their daily operational activities. In Islam, work is
considered as an act of ibadah (worship). A work dedicated to gain worldly materials for fulfilling the
life needs. Those materials also can be used as tools or facilities to worship Allah (SWT). Neglecting
work is not a part of the Islamic teachings.

The Prophet Muhammad is an icon in Islam who has given good life examples to his adherents. He
always prays to Allah (SWT) for seeking help to keep him away from laziness. As an entrepreneur, he
was a hard working person that made his partner, Khadijah (RA) appreciated him. All his merits and
virtues are remembered by Khadijah (RA), later became his wife.Prophet Muhammad (PBUH) have
shown to all Muslims a harmony between work and worship that can boost the quality of life.
Muslims must be consistent in their act of worship and, they also have to put unlimited efforts in their
lifework, as it has been mentioned in one of the popular statements of a Muslim scholar: “work hard
(for making a living and survival) as if you are going to die”. The Prophet (PBUH) also advices the
Muslims on the importance of work and said “Verily the best things which ye eat are those which ye

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earn yourselves or which your children earn”. In fact, the Prophet (PBUH) always teaches Muslims on
how to be productive, work effectively and contribute to the society.

Imam Hasan Al-Basri (one of the scholars of Islam), was asked about the secret behind his asceticism.
The Imam replied with four things: One, I believe that my sustenance will never be stolen by anybody
(but I have work to obtain it). Two, I realize that a work that is mine must be undertaken by me, so I
do not reduce my attempts in doing it. Three, I believe that Allah (SWT) is the Omnipresent (Al-
Basiir – The All Seeing), so I do not like him watching me doing sins. Four, I understand that death is
coming anytime for me, so, I get ready for it (through good deeds).

The employees in the organisations should put effort and hard works. The contributions to produce an
excellent outcome may boost individual’s talents, competencies and genuineness. Any individuals
who fight for superiority intend to attain achievements for their advantages andthe organisation. The
Prophet (PBUH) has instructed to look for perfection in all subjects. It is a basic principle in Islamic
culture. The Prophet (PBUH) said“Verily, Allah loves that when anyone of you does a job to perfect
it”. The Prophet (PBUH) also said “Verily Allah has enjoined goodness to everything”. Attaining
superiority needs exceptional attempts but, please avoid to take advantage of other abilities in doing
works. The Prophet’s (PBUH) noble companions had shown the Muslims all practices of
perfection.The Prophet (PBUH) also mentioned“The most merciful in my Ummah is Abu Bakr, the
most pious is Omar, the most genuinely honest is Uthman, the most fair is Ali bin Abi taleb, the one
who knows best how to recite The Quran is Ubayy Ibn Ka’b, and the one who has most knowledge
about what is lawful and what is prohibited is Mu’adh Ibn Jabal. Every people have a trustworthy
guardian, and the trustworthy guardian of this people is Abu Ubayd Ibn al-jarah”.

Muslims achieve superiority by doing the best deeds, while they are struggling to attain the good
ethical values of al-muhsineen (those who do virtues). It also means that Muslims need to follow the
footsteps of other pious adherents of the Prophet (PBUH) who did excellence in worship and worldly
works. Prophet Muhammad(PBUH) mentioned “if you pray, pray well, and if you fast, fast well”.
Managing time properly is crucial for Muslims because it could give motivation to do greatly
rewarded best deeds. Time wasting is not an action of Muslims. When Muslims abused the time given
to them, they are considered as the losers. Certainly, an excellence is a basic aim of Muslims’ life.
The directors, managers or supervisors who are Muslims, they must ensure to achieve excellent
results in their daily works and for the organisations.

Performance is the result of someone effort to achieve a certain goal. So performance is the ability to
do the job based on certain knowledge. There are some indicators for a Moslem considered good in
implementing Islamic values. The intention, plan or aim he gives anything he has done on the hand of
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Allah. He always implements Islamic values. He does not think only the happiness in the world but
also the happiness in the hereafter looking after the balance of life, how to survive by doing
something in better way by working hard, and getting some wealth to the orphanage or to those who
need it.

The measures of performance are still debatable. Masuo et al. (2001) suggested the non-monetary
success’ measures of satisfaction, personal development and achievement, eventually satisfaction is
selected as the most important criterion (Haber and Reichel, 2005). However, many studies associated
with performance’s measures excluded the religiousity aspect as one of thefactors. The religiosity
factor is discussed comprehensively in the Islamic teachings as it is an integrated measure of financial
or non-financial success which refers to everlasting welfare and blessing called al-falah (Ahmad,
2006). Meanwhile, Yousef (2001) explained al-falahas a way to attain greater reward by seeking the
pleasures of Allah (SWT) and would motivate every Muslims to put all attempts in their duties. It is
an outcome in the Islamic performance model. Siddiqi (1979) added that al-falah can be attained
merely through an ethical approach to human matters. Below are the dimensions of al-falah proposed
by both authors:

Table 2. Dimensions of Al-Falah

Khalifa (2001): Yousef (2001):

1. Halal – livelihood that are in accordance to what is being
1. A dynamic (strive to thrive).
outlined by Allah SWT and shariah.
2. A universal (implying the endeavours
2. Qanaah – be pleased and thankful with one’s earning.
of one’s entire life).
3. An ethical (to be righteous, in 3. Taufiq - Asking for the blessing of Allah in proportion to
intentions and deeds, to be blessed). one’s expectation.
4. A continuity (enjoyed both in worldly
4. Sa’adah - Spiritual happiness.
life and in the Hereafter).

5. Jannah – Worldly success should act as the bridge to the

ultimate success in the life hereafter (paradise).
Source: Authors

Satisfaction in Islamic term is qonaah. Muslims hardly have this behavior unless those who are given
guidance and guarded by Allah from the evil zeal, parsimony and avarice (Khalifa, 2001). An instance
of qonaah is shown in the salary received by a Muslim whoworks for an Islamic organization. He or
she may get a smaller salary for his/her work but perceive higher satisfaction on his/her work due to
the rights for doing the Islamic obligations such as Salah in working hours (Sharfuddin, 1995). Thus,
satisfaction in Islam refers to the act of meeting religious duties.

14
Both hard work and excellence are among the Islamic culture that have been taught which will affect
the firm performance or al-falah in Islamic term. While satisfaction or qonaah considered as another
achievement orientation that could become a culture in any organizations which will bring improve
the relationships, cooperations and collaborations.

3.4 Organizational Culture and Knowledge Creation Capability

According to Barney (1986), the organizational culture is one of the crucial push factors for any
movements in the organization. It affects the dissemination of knowledge, blended interactions, and
the perceived values of organization members. It also has an important impact on knowledge creation
capability. To explore in details the effect of organizational culture on knowledge creation capability,
three components of organizational culture namely individualism-collectivism, uncertainty avoidance,
and power distance must be in place and should be conceptualized as organizational values.

Hofstede (2001) posited that the individualism-collectivism is a significant dimension of

organizational culture. Individualism is defined as a condition in which personal interests are
considered more important than the interests of the groups, while collectivism means when the
groups’ interests are prioritized than the personal desires (Wagner, 1995). Individualism focuses on
independence whereas collectivism stresses on interdependence (Wuyts and Geyskens, 2005).In the
individualist organizations, employees are likely to be served as individuals because they felt that the
personal value is more important than the company’s objectives, while in the collectivist
organizations, the employees persist collaboration to appreciate the organizational values (Chen et al.,
1998).

Wang et al. (2011) added that the collectivism has a significant influence on knowledge creation
capability for two rationales:
1. Collectivism emphasizes on collaboration and teamwork (Chen et al., 1998). Nahapiet and
Ghoshal (1998) posited thata collaboration creates an access and makes motivation to swap
knowledge. Moreover, teamwork accommodates a dissemination of knowledge and is a way
to make the creativity become effective (Wagner, 1995). Thus, collectivism has a significant
endowment to knowledge creation capability because it could be used in promoting
knowledge swap(Nahapiet and Ghoshal, 1998; Smith et al., 2005). Inversely, individualism
focuses on the quest of personal goals and generates a readiness to deal with members of the
in-group (Wagner, 1995). Thus, members in individualist organizations rarely spread and
swap the knowledge with other organizational members, which hinder knowledge creation
capability (Bochner and Hesketh, 1994).
2. The members in collectivist organizations choose cooperation to create organizational values
and they appreciate the values from the knowledge swap (Bates et al., 1995). Inversely, the
15
 members in individualist organizations considerpersonal values are more significant than
organizational objectives (Chen et al., 1998), thus they onerously recognize values from the
knowledge swap (Nahapiet and Ghoshal, 1998; Smith et al., 2005).

The uncertainty avoidance associates with the degree to which an organization finds threatened by
and attempts to avoid uncertainty (Hofstede, 2001).The impact of uncertainty avoidance on
knowledge creation capability is negative. Organizations that are low in uncertainty avoidance
perceive uncertainty, take the risks, compromise diverse of opinions and behaviors, and dare to defy
existing routines through forming new knowledge(Cakar and Erturk, 2010). Inversely, organizations
that are high in uncertainty avoidance require consistency and conformity, and select likely for
systematization (Erramilli, 1996), thus they are more compliant to defend the constancy of current
knowledge base rather than catching up new knowledge (Bochner and Hesketh, 1994). Therefore, low
uncertainty avoidance organizations have better motivation to form new knowledge and boost their
knowledge creation capabilities.

Moreover, the eagerness of organizations to test new ideas and take risks has a positive impact on
knowledge exchange (Cakar and Erturk, 2010). Organizations that are low in uncertainty avoidance
drive the employees to test and exchange ideas and knowledge. Inversely, organizations that dislike
risk-taking and testing will move against disseminating and combining ideas and knowledge (Smith et
al., 2005). As a result, uncertainty avoidance drives the organizations away from promoting
knowledge creation capability.

3.5 Organizational Culture and Organizational Change

A change within an organization associates with any amendments in tasks. It is the process of
analyzing the gap between the past and present which is needed for the future outcome. The
organizational change indicates a diversity and interaction of the technical and human activities that
had interrelated dimensions in the organization. The individual’s attitudes toward change may vary. It
is hardly to change the attitudes because of the resistance from within. Some are more resistant to
change and others are more amenable to change. The resistance to organizational change may derive
from one or more factors such as absolute change in task, alleviation in economic assurance,
psychological menaces, interference of social compositions, and lowering of status.

There are three types of individuals’ or groups’ reactions to organizational change as follows:
1. Affective. This reaction is relatedto the sense of being connected to satisfaction or worried
about change.
2. Cognitive. This reaction is related to opinions associating with utility and necessity, and about
the knowledge required to deal with change.
16
 3. Instrumental. This reaction is related to actions already undertaken or which will be
undertaken to deal with change.

Meanwhile, there are three types of attitudes toward change as follows:

1. The affective component comprises of the senses of a person toward an attitude object, which
implicates assessment and emotion, and is often expressed as like or dislike for the attitude
object.
2. The cognitive component of an attitude comprises of the information possessed by a person
about an individual or thing which is based on what he/she believes is true.
3. The behavioral trend emphasizes on the manner of a person intends to act toward an attitude
object.

The organizational cultures which consists of values, norms and beliefs that are accepted by the
members of organizations will ease the changes in any procedural and directions of an organization.
The supportive cultures results positivity and acceptability to change. By having a number of
members who are adapting and integrating the new beliefs, the changes would not take too hard and
longer time.

4. Work Ethics, Leadership and Organizational Culture

4.1 Islamic Work Ethics and Organizational Culture
Ethics is one of the most commonly discussed topic in the recent years including the Islamic work
ethics (IWE). The discussion on the IWE emerged with the emphasis of having better relationship
among the human beings. In Islamic teaching, all human beings have to build relationship with their
God (hablum mina Allah) and among themselves (hablum minannas). The IWE is reflected the
akhlaqul karimah which being enforced by the Prophet Muhammad (PBUH) which then Muslims are
obliged to adopt including in their daily business activities, not merely implementing the religious’
rituals.

The employees have strong committment to their organization not merely based on the received
beneficial packages or compensation but to consider the IWE as one of the factors. Muslims who wish
to be granted the pleasure of Allah, may achieve this by applying the core values of ethics (Ahmad,
2006).

The IWE is defined as the set of moral principles rooted based on Al-Qur’an and Sunnah which
closely related to terms of al-khuluq that concerns on Islamic values, belief and practices (Arslan,
2001). It inspires the employees of having trust in the working place and strengthens social business

17
accountabilities (Ali, 2005) through hard working, commitment, dedication, work creativity and
cooperation (Yousef, 2001). The IWE meant for life fulfilment and has business initiatives in the
highest tribute (Ahmad, 1976) which also serve as criteria for evaluating their performance in positive
or negative terms (Al-Saadan, 2005). The believers in Islam who practice it seems to be more
committed to their organizations (Yousef, 2001). The elements of the IWE are adopted in any
business applications and actions that every Muslims should monitor and involve in as the servants of
God (Beekun & Badawi, 2005). Nasr (1984) asserted that the IWE must be a serious enigmabecause it
is the ideal which Muslims need to realize.

Yousef (2001) differentiate between the Islamic and Protestant work ethics (IWE vs PWE) whereby
both are emphasized on dedication to work, commitment, hard work, creativity in work, evasion of
unethical manners of wealth aggregation, collaboration, and competitiveness in the working place.
However, unlike the PWE, the IWE more focuses on intention than on outcomes, stresses on duties of
social aspects, emphasizes on goodness and justice, and sees involvement in economic activities as a
duty. This is asserted by Esposito (2005) that Islam embraces both private and public life, and is
affecting not only religious aspects but also social behavior.

The most popular measurement scales of Islamic work ethics was developed by Ali (1988) which then
has been used by researchers in both organizational and management contexts (Yousef, 2001;
Rahman et al. 2006; Ali & Al-Kazemi, 2007; Khalil & Abu-Saad, 2009; Kumar & Rose, 2010;
Wahab & Rafiki, 2014). Below Table is the elements of the IWE as proposed by Ali (1988) with the
reference from Al-Qur’an.

18
 Table 3. The Al-Qur’an Reference of Islamic Work Ethics
Subject Al-Qur’an Verses
Agreements and promises Ar-Rad 13:25, Al-Qasas 28:28, Yunus 10:71
Consideration for others An-Nisaa’ 4:36, Al-Mumtahina 60:9.
Consultation Ash-Shura 42:38, Taha 20:103, Al-Kahf 18:22
Continuous improvement Al-Araf 7:42.
Cooperation Al-Hujraat 49:9, Maryam 19:96.
Equality and unity Al-Isra’ 17:35.
Fairness in dealings Al-Anaam 6:152, Al-Mumtahina 60:8, An-Najm 53:32, Al-Maida 5:8.
Fairness in wages. Al-Imran 3:57, Saba’ 34:37.
Hard work. Al-Baqara 2:62; 82, Al-Anaam 6:135
Helping others As-Saff 61:14, An-Nahl 16:97, Yunus 10:41
Honesty and justice. Al-Baqara 2:177, Az-Zumar 39:2; 3
Humble Hud 11:23
Patience Hud 11:11
Al-Baqara 2:25; 225, Al-Baqara 2:62, At-Taubah 9:105, As-Saff 61:8, Al-
Righteous/Intention
Qasas 28:19
Social order Al-Imran 3:110, Al-Baqara 2:273
Truth Al-Anfal 8:27, Yunus 10:61, An-Nur 24:8
Source: Ali (1988), Rafiki and Wahab (2014)

The morality implementation is associated with organizational culture of an organization. The akhlaq
or moral characters are important to be implemented as an indication of the perfect Muslim. In fact,
the knowledgeable person is useless without having good characters. The Prophet Muhammad
(PBUH) said “indeed I have been sent to complete the perfecting of goodcharacter”. The Prophet
(PBUH) also said “the best among you are those whose character is good”. Then the wise man said
“when money is lost nothing is lost, when health is lost something is lost, but when character is lost
everything is lost”.

3.2 Leadership and Organizational Committment

Leadership is defined as a capability to influence a group of people towards a set of vision or
attainable goals. The compatible leadership approaches are needed in the extremely competitive and
unpredictable business environment. It is also emphasizing on the efficiency of empowering people.

Leadership is a process of influencing a society where one individual can obtain supports of others in
the completion of an ordinary duty. A leader is able to organize, give guidance and examples, point
out the directions, figure out the purposes, show the ways, engage in a common mission and urge to
achieve objectives. Hidayat et al. (2017) mentioned that there are three adopted leadership styles;
transactional, transformational and the laissez-faire, which have been discussed in previous studies.
Buon (2014) stated that transformational style is the most citedstyle that conveys about imminent
relations created between the leaders and the followers. The leaders give motivations and inspirations

19
to the followers based on their vision, values, ethics and norms. Buon (2014) added that an
organization led bythe transformational leaders have greater impact to the performance. They also
create hopes and confidence to their subordinates to insists in dealing with uncertain obstacles.

Meanwhile, the Islamic leadership style has a unique approach where it commits to its principles on
spiritual features and practices. These made it exclusive than the three modern styles of leadership
(Aabed, 2005). Haddara and Enanny (2009) added that the leaders in Islam are leading a group of
people and managing the organizations with amanah (trust) and responsibility. The two principles
importantly must be held by the leaders. The trust comes from God and people, then the leaders must
be responsible to God and people for the given trust.

Beekun and Badawi (1999) posited that Islamic leadership reflects a psychological bond between a
leader and his followers, where a leader is expected to give guidance, shelter and care to the follower.
There are two main roles of a leader, first is a servant-leader or called as sayyid al qawn khadimuhum,
where a leader becomes the servant of his followers; and second is guardian-leader, where a leader is
looking for the followers’ prosperity and motivates them towards doing right. Moreover, the leaders
in Islam must be committed to promote the Islamic moral characters of Iman, Islam, Taqwa and
Ihsan. Other Islamic values that must be adopted by Muslim leaders are; justice (Qur’an, 5:8); trust
(Qur’an, 8:27); righteousness (Qur’an, 2: 177); struggle towards self-improvement (Qur’an, 22:77-
78); and promisekeeping (Qur’an, 5: 1).

Meanwhile, Moten (2011) stated that there are misperceptions on the values of Islamic leadership as
compared to the leadership styles adopted by secular societies due to few reasons. Firstly, Islam has
no discrepancy between spiritual and worldly matters. It comprises of the rules of human behavior
covering all facets of human life. The religion is not a unit, department or organization concerns but it
is a comprehensive reference (Iqbal, 1962; 2006). Furthermore, Moten (2011) posited that Islam does
not deny the involvement into politics, nor would it allow politics to become a filthy business.
Secondly, the main principle of Islam is unity and sovereignty of Allah or tawhid, no one has the
power of control and command except Allah. Thisdenies anyone who claims absolute right and
power over anything. Finally, Islam rejects all temporal primacy and warns the believers against using
spiritual values and ethical eminence for personal benefits. Both Muslim leaders and followers are
seeking a life in compliance with shariah.

Muslim leaders learn about management based on the possession of revealed knowledge and other
Islamic sources. They are implementing the initiatives and actions that are compliance to the Islamic
beliefs and practices. This is related to the concept of tawheed that had been practiced by Prophet
(PBUH) (Khaliq, 2007a, b).
20
Khan (1998) mentioned that human beings have been destined with great qualities which potentially
contribute to the exceptional achievements. Achieving such objectives requires the implementation of
specific Islamic principles. Hossain (2007) reminded Muslim leaders to acknowledge the importance
of the revealed sources of knowledge (Qur’an and Sunnah). Understanding Islamic values will
promote the culture of God-consciousness and justice within the organization while guarding against
oppressions (Khaliq, 2009).

The Muslim authors had continuously summarized and listed the Islamic leadership principles until
today.One of the principles is team building. The leaders have to strengthen the mental and physical
of the teams and this can be done by attending Friday (Juma’at) sermons, congregational prayers and
zikr circles (Kassem and Al-Buraey (as cited in Ismail, 2007). Khan (1998) wrote that the Prophet
Muhammad (PBUH) as a leader has positive thoughts and a result oriented person. He always looks
forward to be productive.

Table 4. Islamic Leadership Principles and Qualities

Begin from the possible Turn minus into plus
The power of peace is
See advantage in stronger than the power
disadvantage of coercion
Receiving the message; a
principle equated to the
Gradualism instead of act of asking advice and
radicalism knowledge in order to
point out the matters to
the followers.
Disseminating the
message; referring to the
To be pragmatic in
act of bestowing tasks
controversial matters
and confirming that they
are well completed.

Change the place of Not to be a dichotomous Morality and piety

Eloquence (Fasah)
action thinker (honesty and trust)
Make a friend out of an To bring the battle in
Patience (Sabr) Superior communication
enemy one’s own favorable field
Faith and belief Knowledge and wisdom Enterprise (Iqdam) Justice and compassion
Mutual consultation and
Courage and
unity (fraternity and Leniency (Lin) Patience and endurance
determination
brotherhood)
Commitment and
Lifelong endeavour Gratitude and prayers Conviction (yaqin)
sacrifice
Mutual consultation
Knowledge (ma’refah) Justice (’adl) Self-sacrifice (tadhyah)
(shura)
Humility Eloquence (fasah) Patience (sabr) Leniency (lin)
Mutual consultation (Al-
Enterprise (iqdam) Sovereignty (Al-Siyadah) Justice (Al-’Adalah)
shura)
Enjoining the right and
Equality (Al-Musawat) Freedom (Al-Hurriyyah)
forbidding the evil
Source: Khan (1998), Khaliq (2007a, b), Ismail (2007), Khan (2007), Adnan (2006), Lukman (1995)
21
Definitions of the concept organisational commitment include the description ofan individual's
psychological bond to the organisation, including a sense of job involvement, loyalty and belief in the
values of the organisation. Organisational commitment is characterised by employee's acceptance of
organisational goals and their willingness to exert effort on behalf of the organisation.

Organizational commitment has several dimensions that are related to the values compatible with the
organization, employees’ fidelity to the organization, readiness to put some efforts representing the
organization and preserve any relationships in the organization. It is used positively to measure the
organization’s objectives and as a common platform in connecting the employees and employers.

The supervisor has a task to motivate the employees and not only direct them on completing the jobs.
The leaders almost have a similar role of creating work motivation and effective communication to
the employees. While the managers are persuading, helping and guiding the employees in execution
of their own decision.

The employees may send signs of commitment to their employer as an expression of satisfaction
before getting any supports by their employer. The support from a direct leader can bring positive
impact to the employees such motivating them in avoiding any wrong doings. The leadership style
presents an imperative role in reassuring the effectiveness and efficiency in the organization, which
then influences the employees’ commitment. Hence in many studies, the leadership styles have
prominent relationship with organizational commitment. The leaders bring a crucial impact in an
organization on supporting the employees’ commitment in accomplishing their jobs. The leaders also
need to grasp the employees’ necessities as they will influence the organizational commitment
significantly.

The organizational culture is used as an imperative influencer which results in commitment and
improved performances. The commitment of any employees is determined by the level of happiness at
work. They will deviate away from the organization emotionally when they couldn’t find the
opportunities as expected. This will influence an individual’s organizational commitment. Meanwhile,
the organizational culture also can be regarded as a mediator on organizational commitment. If the
organizational culture was accepted by the employees, this will contribute to the better performance.
Normally, the bureaucratic culture in an organization brings insignificant correlation to employee’s
commitment and can prevent the employee’s work effectiveness.

When the culture is supportive, it will bring significant outcomes that lead to an increased in
commitment and engagement of employees. These correlations were confirmed in a study by Odom et
22
al. (1990). They also stated that the organization should develop an achievement based culture or a
mission culture in order for the employees to be more committed to the company’s objectives.
Employees’ commitment must be consistently agreed and it should support the company’s goals. It is
admitted that the bureaucratic issues result in less commitment by the employees in their daily works.

Summary
This chapter provides insights into Islamic organizational culture. It has been highlighted throughout
the chapter the roles of revelation namely the holy Qur'an and the sayings (hadith) of the prophet
(PBUH) in determining the salient features of Islamic organizational culture. Using the revelation as
the main source of knowledge for developing the organizational culture is the main difference
between conventional and Islamic organizational cultures.

Being the leader and entrepreneur during his life, Prophet Muhammad (PBUH) had provided an
example of how Islamic organizational culture applied in all types of organizations including business
organizations. Comparing Western and Islamic organizational cultures, it can be concluded that both
organizational cultures have many similarities. In fact, Islamic organizational culture is more
comprehensive than the Western counterpart. Therefore, Muslim leaders and entrepreneurs should
learn and apply Islamic organizational culture in their respective organizations as what has been
exampled by the prophet (PBUH) during his life.

Chapter Highlights
The analysis presented in this chapter helps to get a good understanding about:
• The meaning of Islamic organizational culture
• The salient features of Islamic culture
• Relationship between organizational culture and firm performance
• Relationship between organizational culture and knowledge creation capability
• Relationship between organizational culture and organizational change
• The meaning of Islamic work ethics
• Relationship between Islamic work ethics and organizational culture
• Relationship between leadership and organizational committment
• Islamic leadership principles and qualities

Formula Review
NA

Solved Problems
NA

23
End of Chapter Questions
1. Define Islamic organizational culture. Compare it with conventional organizational culture.
2. Discuss 5 (five) salient features of Islamic culture.
3. Discuss the Islamic organizational culture model.
4. How the organizational culture affects the firm performance?
5. Discuss the relationship of organizational culture and knowledge creation capability.
6. How the organizational culture makes changes in organizations?
7. Define meaning of Islamic work ethics. Compare it with Protestant work ethics.
8. Discuss the relationship of organizational culture and Islamic work ethics.
9. Discuss the relationship of leadership and organizational commitment.
10. As a leader in an organization, why you need to apply the Islamic leadership principles and
qualities? Discuss.

Model Answer for the end of chapter Questions

1. a. The Islamic organizational culture is a set of values based on Qur’an, Sunnah, Ijma, and
Qiyas that helps the members of an organization in understanding the aims of an organization,
the standards and ways in which it runs, and the imperative affairs in order to achieve the
ultimate success (falah).
b. Compare it with conventional organizational culture.
The conventional organizational culture consists of distinctive norms, beliefs, principles and
ways of behaving which considered as distinct characters of an organisation. It is as a system,
a set of opinions or beliefs which are shared by members, that distinguish an organisation
from other organisations. An organizational culture is often interpreted as a foundation of
philosophy that provides direction for organizational policies in managing employees and
finance.
2. The 5 (five) salient features of Islamic culture are: a. Putting trust in Allah; b. Missionary
spirit; c. Honesty and truthfulness; d. Accountability; e. Consultative decision making
3. The Islamic organizational culture model consists of 4 phases: a. Initiatives of the founders of
the organization; b. Selecting the managers and operatives; c. Top Managers’ role; d.
Socialisation
4. Do organizational culture affects the firm performance.
The organizational culture that relates to the firm performance through the attitude of hard
working and excellence orientation. The goodness of organizational culture can develops
better relationship between employees and managers, creates a conducive working
environment and enhances productivity. All of these results associated with firm performance.
5. Relationship of organizational culture and knowledge creation capability.
The organizational culture is one of the crucial push factors for any movements in the
organization. It affects the dissemination of knowledge, blended interactions, and the
perceived values of organization members. It also has an important impact on knowledge
creation capability through three components namely individualism-collectivism, uncertainty
avoidance, and power distance that conceptualized as organizational values.
6. The organizational culture makes changes in organizations.
The organizational cultures which consists of values, norms and beliefs that are accepted by
the members of organizations will ease the changes in any procedural and directions of an
organization. The supportive cultures results positivity and acceptability to change. By having
a number of members who are adapting and integrating the new beliefs, the changes would
not take too hard and longer time.

24
 7. Define meaning of Islamic work ethics. Compare it with Protestant work ethics.
a. The IWE is defined as the set of moral principles rooted based on Al-Qur’an and Sunnah
which closely related to terms of al-khuluq that concerns on Islamic values, belief and
practices. It inspires the employees of having trust in the working place and strengthens social
business accountabilities through hard working, commitment, dedication, work creativity and
cooperation.
b. IWE and PWE both are emphasized on dedication to work, commitment, hard work,
creativity in work, evasion of unethical manners of wealth aaggregation, collaboration, and
competitiveness in the working place. However, unlike the PWE, the IWE more focuses on
intention than on outcomes, stresses on duties of social aspects, emphasizes on goodness and
justice, and sees involvement in economic activities as a duty.
8. Relationship of organizational culture and Islamic work ethics.
All components of Islamic work ethics such fairness, justice, trust, honesty, hardworking etc
are considered as a culture that need to be applied in the daily life in an organization.
9. Relationship of leadership and organizational commitment.
The leaders can influence the followers or employee based on how his/her behaviors and
actions. If they show the good examples, it may increase the employees’ commitments. The
leaders have principles that can bring and guide employees to be committed and in the right
directions.
10. The Islamic leadership principles and qualities.
The Islamic leadership style has a unique approach where it commits to its principles on
spiritual features and practices. The leaders in Islam are leading a group of people and
managing the organizations with amanah (trust) and responsibility. The two principles
importantly must be held by the leaders. The trust comes from God and people, then the
leaders must be responsible to God and people for the given trust. They must be committed to
promote the Islamic moral characters ofiman, islam, taqwa and ihsan. There are two main
roles of a leader, first is a servant-leader or called as sayyid al qawn khadimuhum, where a
leader becomes the servant of his followers; and second is guardian-leader, where a leader is
looking for the followers’ prosperity and motivates them towards doing right.

Discussion Questions
1. As a manager, how will you ensure that the organizational culture is successfully influence
the firm performance and knowledge creation capability in your respective country and
organization? Provide logical suggestions to support your recommendations.
2. As a leader, what are your approach to implement the Islamic leadership principles and
qualities in an organization with multiple races and religions employees? Provide your answer
with evidences.
3. Islamic work ethics and Islamic organizational culture are applicable in any organizations.
What are the key challenges faced by you as General Manager to implement both Islamic
kinds of ethics and culture? Provide evidence-based recommendations.

25
Cases
BNP Paribas: Building a business development culture

Organisation Profile

BNP Paribas Real Estate was a business line established following the merger of BNP and Paribas in
the early 2000s. In 2009, a rebranding occurred, with Atisreal was engaging the BNP Paribas mark.
BNP Paribas Real Estate UK has its headquarters in London andemploying roughly 650 staff. While
gaining a success in its commercial center, the monetary circumstance profoundly affected the
property business. Referring to the plan and development of the business, BNP Paribas Real Estate
needed to reexamine their business model and ways of operations. Based on property market of the
late 1990s and mid 2000s which indicated that BNP Paribas Real Estate could operate the business
model that emphasized mainly on the delivery of services without much on creating new development
in business. Only a number of senior staff can look for new opportunities proactively. The crumple of
the property market implied that business no longer came to BNP Paribas Real Estate automatically,
but in order to survive and attain the strategic objectives of the organization, a business improvement
culture needed to be created. Getting new customers and attaining sales targets was viewed as a
fundamental aspect of everyone's task.

The main reasons of culture change

The primary drivers for the selection of a business development culture were the crumple of the
property market and the monetay crises that appeared simultaneously. These affected the market
situation where they create a notable decrease in business prospects. The growth only can be achieved
by acquiring a dominant market share.By having acquisition and merger, BNP Paribas Real Estate
UK has a combination of culture where each of companies running and aiming different accents on
business needs. Furthermore, based on the feedback of the employees in 2008, they have an option in
completing their works rather than developing new business. With this significant proof, the company
realizes the demand to attend business development as a vital need. Emphasizing on a culture of
business development unmistakably reflected the considerable growth strategy.

The major culture change activities

Designing an organisational structure and processes

The encouragement to enhance a business performance through organizational culture is by focusing

on innovation, cross departmental supports, cooperation and standardised processes that are required
to take place noticeably inside the organisation. Accordingly, the constitutions of the executive board
at BNP Paribas Real Estate UK hadchanged, whereby the director of business development and
marketing became a member of the executive group. This was obviously reflecting the plan at the
strategic level. Moreover, a client solutions team was created to prioritize the top 50 clients.The team
brought prominent changes that emphasized essentially on selling and expanding business. These
changes created values that can help the organization to gain advancement in the ventures.

In addressing the challenges of business processes, BNP Paribas Real Estate UK created a unified
process of attending works. The aim is to preserve a common goal and extend a shared culture. It is
known that business development is associated with the targeting, projecting and managing the clients
but not directly related to the culture change, thus the executive group set up a culture working group
that looks more comprehensively at the ‘One Culture’ of BNP Paribas Real Estate. This can be seen
from the commitment of the organisation to create a common understanding and collaboration.
26
Embedding the values underpinning the business development culture

Before introducing the program on the three elements of business development, a comprehensive
communication campaign should be initiated. This includes desk drops and road shows over all
branches on the distinctive matters related to the business development. The CEO and directors
actively participated in the campaign and served a sense of gravity to the employees. Additionally, the
ideas were created that announced the success of employees in attracting new clients. The purpose is
to appreciate and cherish a success more transparently in order to promote a culture that gives values
to the process of business development. The expectations of the organization that all employees need
to do works in a team, utilize the available resources, and implement the newly process of business
development. These endeavors will bring a consistent affirmation of the values derived from cultures.

The role of leadership

It was known that the changes in BNP Paribas Real Estate UK were urged by top down command.
This included in investigating of any issues related to business development and the plan for training
programs of introducing new process, which was handled centrally. The executive group has a
legitimate role to change in leadership and promotion, while the CEO and the business managers
undertake a supporting role. Ironically, no single division or department including the HR and
business development has a leader that has the ability to do the change. Thus an initiative to develop
new culture was emerged with a group of 200 top salespeople comprising all business units in the
company. It happened that these people will take part and have significant effects in creating the
change. This has positive impacts, however there are other business development issues including the
training programs that need to be addressed by a role of a leader.

Change agents’ reflections on the culture change

There are several subjects of the change processes that need to be emphasized in driving the business
development culture. They are discussed below.

Culture change as a top–down process

The change agents recognized the values of having any change in the company which only can be
initiated by the executive group. The support from this organizational level has created the
distinctions in applying and preserving the change. Meanwhile, the change may begin with a process
of delegating individuals to attend training courses whereby expectedly they can show their passion
and commitment to the change. The continuous support from the executive group is a sign that
business development is needed to withstand in the marketplace. The compatibility in communication
and actions is a positive gain. For the change agent, it is admitted that the change only can be
established by approaching the entire senior management team, and not to a single unit or individual.

Staff engagement

Since every decision came from senior management, the engagement of staff in the development of
plans and strategies in applying the change is minor. A consultation may not be incurred but it was
found that the vision for the change and the arrangement of the training programs were prepared by
the experts.There was intimate collaborationbetween business development and training and
development. Meanwhile, the enthusiasm of staff is seen on their engagement in the training programs
which has been measured as preferential. The staff are vibrant to attend the training and be part of the
change. The design of workshops was embarking the change by evoking the skills, knowledge and

27
experience of the audience. Additionally, the best practices’ handouts were collected from the cases of
the past businesses, the legacy of the accomplished training, and the intellectual property of the
business development group.

Organization systems and processes

The change agents intend to emphasize mostly on the way the processes related to business
development are being utilized. One of the problems spotted is that the organizational systems are not
certainly supportive and/or encouraging to apply the change. For example, there is no a standard or
complete system exists in the organization that supposedly records all the information/data from the
entire business units. This made the works more complicated especially when a new IT system is
being extended.

Moreover, it is important to emphasize on the appraisal system and the incentive schemes in order to
acknowledge the business development as a new capability and competence. Further works need to be
done to suit the human resources process with the new requirements. An alternative must be prepared
in managing the staff who are not ready to adopt new process. Some of the staff admitted could not
receive any responses after the training courses on the important values of the new process. Therefore,
it is crucial to conduct an evaluation whether the training programs were successful in
accommodating the absorption of the new culture or not since no benchmark was stipulated.

It was known that the business development initiative is only a starting point. The important things are
to have consistent messages that assist to include the change. There is a challenge to create new
culture that suits to the current processes of business development. Nevertheless, the attention may be
given to the organizational appraisal systems in ensuring the required skills and competencies are
encouraged.

This case is retrieved from Chartered Institute of Personnel and Development, UK in 2011.

On-line Resources
Useful Websites

Harvard Business Review: https://hbr.org/topic/organizational-culture

World Bank Blogs: http://blogs.worldbank.org/category/tags/organizational-culture

Ernst & Young Global Limited: https://consulting.ey.com/

Society for Human Resource Management: https://www.shrm.org/resourcesandtools/tools-and-

samples/toolkits/pages/understandinganddevelopingorganizationalculture.aspx

The Oxford Review:https://www.oxford-review.com/what-is-an-organisational-culture/

28
Abbreviation
SWT : Subhanahu Wa Ta'ala orGlory to Him, the Exalted

PBUH : Peace Be Upon Him

RA : Radhiallah ‘Anha

IWE : Islamic Work Ethics

PWE : Protestant Work Ethics

Glossary of Islamic Business Terms

Islamic Business
Meanings
Terms
Reliability; trustworthiness; loyalty; honesty. It is a value of Islamic society in
Amanah mutual dealings. It also refers to deposits in trust. A person may hold property in
trust for another, sometimes by implication of a contract

Haram Unlawful or that which is against Islamic law.

Halal That which is allowed according to Islamic law

Zikr A kind of devotional act

A compulsory levy on each Muslim who has wealth which equal to or more than a
Zakat minimum called Nisab. It is one of the five pillars of Islam. There are eight
categories of those who receive Zakah, including the poor and needy

This means interest or it refers to any pre-agreed excess paid or received over and
Riba
above the principal in a loan contract.
Ummah Community; people; group;nation

Sayings and acts of the Prophet Muhammad (PBUH) as well as reports of

Sunnah
companions’ acts or sayings in which the Prophet agreed with.

A muhsin (male, plural muhsineen) and a muhsina (female, plural muhsinaat) are
Al-Muhsineen
those who do good and who when saying someone did well
Good morals or the spontaneous act according to both reason and religion. For
Akhlaqul Karimah
example, honest, fair, humble.
The names of two kinds of consensus are:
Ijma 1. Ijma al-ummah - a whole community consensus.
2. Ijma al-aimmah - a consensus by religious authorities
The process of deductive analogy in which the teachings of the Hadith are
Qiyas compared and contrasted with those of the Qur'an, in order to apply a known
injunction to a new circumstance and create a new injunction
Qanaah To be thankful for every single thing that we have. It associated with satisfaction
Tawhid Unity and sovereignty of Allah

29
Islamic Business
Meanings
Terms
Iman True faith or a believer's faith in the metaphysical aspects of Islam
Taqwa Piousness, fear of Allah, love for Allah, and self restraint
Ihsan Perfection or excellence
The plural of the word akhlaq, means behavior or is the power of the soul that
Al-Khuluq
drives action easily and spontaneously without thought.

A situation where an individual is adequately provided in his/her basic needs,

Al Falah enjoys necessary freedom, leisure to work for the spiritual and material
advancement
Tawakkul Reliance on God or trusting in God's plan

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