Islamic management and business ethics in the Mediterranean

To more and more European companies, the Mediterranean area is seen becoming attractive in terms of commercial outlets, cost-effectiveness and partnership opportunities. This is one of the key outcomes of an A. T. Kearney research carried out in May 2009 on “geographical changes in delocalization”, which stated that the difference in workforce prices is now in favour of MED countries, as Eastern Europe gradually becomes more expensive and less attractive.

Despite some cyclical difficulties, the UfM (Union for the Mediterranean) project, launched in 2008 by President Sarkozy, is the most recent step of an economic regionalization process taking place all over the world. This latest stage has been characterized by the acknowledgment that large economic areas must integrate developing countries in order to survive and be sufficiently competitive, or else they will lack the assets they need to address the challenges of globalization.

As far as the emerging economies from the “Southern shore” are concerned, globalization itself requires clinging to the EU rather than remaining isolated. For this reason, regionalization is nothing but a networking process aimed at connecting national economic systems to one another within a transnational framework, in order to open them and to spur domestic economies through external factors (financing, know-how, organization and management structure), thereby creating additional wealth.

In this context, teaching and research have logically been included among the UfM six priority action plan. So far, however, other than the European Commission’s funding of the Euro-Mediterranean University of Protoroz in Slovenia, efforts in this direction have been limited. As for the teaching of management, it has been left to private actors and no plan has been foreseen to support a common approach.

“Islamic business” has emerged. Taking into account the emergence of “Islamic business” At the end of the 19th century. a symbol of Western economic and technological leadership. and which should on the contrary foster co-sustainable development. which should raise awareness about the negative impact of some North European companies’ practices. This particular way of drawing lessons for renewal from a comparison with the West seems to have repeated itself one century later. and to foster a common managerial approach that could be called “Euro-Mediterranean management”. it seems necessary to take into account current trends in management practices around the Mediterranean. the psychological shock caused by colonialism. the Muslim Brotherhood. as the values it conveys. inspired by ethics more than by religion.(I) Examining “Market Islam” will help to better understand the need for shared business ethics.It is more convenient therefore to look for a common basis in management practices that could help to develop economic exchanges. intended to demonstrate that Islam contains all elements of modernity. and not surprisingly. Over the last years. 1. The emergence of Islamic management might be a good starting point for this. show what a scholar has called “Market Islam”: a special access lane to globalization for the Muslim world. which tried to discover its own access to modernity. led to greater awareness within the Muslim world. which took over the review in 1935. and its most important developments may be observed in the field of finance and marketing. . From this point of view. (II). to which many Muslim reformist thinkers such as Muhammad ‘Abdu and Rachid Rida collaborated. The Manar (the lighthouse) review. are today indirect yet important actors in transforming Islamism from politics to economics.

upper-class. but to adapt a religious offer to the new expectations – real or supposed – of target audiences. However. is thus turning into a new interaction between religion and economics.11. Market Islam is thus located in a universe where cosmopolitism. we should not consider this 1 P. The objective is no longer to convince people about what the supreme truth is. who no longer points at an (Islamic) alternative. and advocates a market-friendly. This new religious manager wants to break with fatalism and localism. Paris. which provides this new Islam with supports and means to spread through the market. . both often associated with traditional Islam. L’Islam de marché: l’autre révolution conservatrice. this actor has distanced himself from the political movements in which he was formerly active. are now one step forward from traditional and political Islam ascetic conceptions and ideals of social justice. piety and wealth. The interaction between politics and religion. and has turned out to be a kind of cultural mediator. the author explains how a new way of thinking has emerged under the aegis of a new actor: “the frustrated Islamist”. New Muslim managers The way all fields of management seem to have been influenced by values conveyed by Islam has been perfectly described in the book “Market Islam”1. through a “prosperity theology” free from inhibition as far as making money is concerned. cosmopolitan and pro-active religion. Le Seuil. Haenni. but rather at an Islamic redefinition of Western culture. which is a key element of political Islam. 2005. which aims at fostering the Islamic capitalist spirit in order to make them more competitive on a global scale. After a description of the context – how political Islam is gradually running out and Islamic activism has been called into question due to the lack of flexibility and efficiency of its authoritarian and pyramidal structures –. Though remaining sincerely religious.

which has more to do with economic success than with politics. which is a perfect illustration of the product’s spirit and objective. In November 2002. 2 B. Vaudour-Lagrace. there is a collective symbolic challenge in building a new Muslim pride on an individual scale.“Drink engaged!” -. C. Mecca Cola was created by a French-Tunisian businessman. An example is given by an “Islamic” alternative to one of globalization leading products. but it should not be considered an isolated case. inspired by Zam Zam Cola. decided to launch his own brand as he got no positive answer from the Iranian company from which he had requested a distribution contract. Revue française de gestion. The company’s founder. has inspired the creation of Qibla Cola in the UK. that is to say Coca Cola. Tawfiq Mathlouti. Pras. as well as Arab Cola and Muslim Up in France. as well as the role of religious authorities in adapting and rethinking Islam in this context. in turn. pp. which showed the importance of Islamic values. since the European Muslim community itself has also to do with the wider phenomenon of self-identity consumption patterns. Mecca Cola may be specific. The result is a large variety of marketing patterns and consumer behaviours. 1. . Marketing et Islam. particularly those working in the Palestinian Occupied Territories. n° 171. Mecca Cola is now distributed in 60 countries and its slogan is displayed on its label . or “ethical business”. as well as competitive strategies to respond to this complex environment. a similar Iranian product which had already taken over the market in Saudi Arabia and Bahrein.movement as the result of a self-interest and commercial strategy: beyond concerns about material welfare. this French company announced its intention to turn part of its profits to humanitarian associations. In a contesting attitude.1 “Islamic business” developments The issue of the relationship between marketing and Islam has been dealt with in a research paper2. 2007. 195-223.des principes forts et un environnement complexe. Mecca Cola. because of its mixed character between market-oriented ways of thinking and political ideology.

and support advertising and survey panels. although the textile industry seems to have equally high potential. These new opportunities have fostered the emergence of specialized agencies such as Islah Consulting in France or Etnocom. though they wish to remain faithful to their roots. It is also leading to changes as far as retailing patterns are concerned. As for producers. is now gradually becoming integrated. This trend shows how Islamic business. but cooked in a legal (hallal) way for Muslims.This phenomenon has mainly to do with the food industry. The 17th of August 2009 a commercial was broadcast on TV that showed for the first time a young couple of “beurgeois” (high income North African third generation immigrants) advertising some ready meals produced by Zakia There is no doubt that Islamic business is expected to grow rapidly and deserves an in-depth analysis. as these moved from traditional channels (groceries and hallal butcheries) to mass-market retailing. they cannot stay outside a retail network that reaches consumers who do not have enough time to dedicate to traditional small shops. two typical European meals. sometimes watering down some of the product’s Muslim peculiarity. the first advertising agency in Italy specialized on multiethnic and multicultural communication.2 The development of Islamic finance . which may be useful to influence consumer practices. An example is given by the increasing success of Muslim community websites and forums (such as oumma. a brand designed for a Muslim public but sold in large retail stores: they were lasagnes and hachis parmentier. 1. which had been on the fringes of global market. Economic competition is indeed putting pressure on large retail stores to take on a market which potentially represents many millions of consumers. most of whom are already their customers.

n°171. The value of Islamic Finance in the world is estimated to amount from 600 and 800 billion USD in 2006 or 2007. according to the projections published in 20083. equity and solidarity at the collective level) instead of religious prescriptions. Revue française de gestion. A study carried out on this subject4 showed that. Financial return on investment is linked with the results of the related project. speaking of values (individual effort and meritocracy at the individual level. which is based on Muslim law. France is currently trying to catch up with the UK: the Strasbourg Management School was the first to devote a master program to Islamic Finance. 20/3/2008. As far as the producers are concerned. in a similar way to that of D. In other words. 4 3 . speculation (gharar) or risk (massir). the fact itself of targeting non-Muslim consumers advocates for a limitation of the product’s Islamic visibility and a use of ethics as a more inclusive concept. Islam forbids civilian or commercial transactions relying on interest (riba).Siagh et A-O Diallo. Generally speaking. relies on two pilasters: the interdiction of interest rates. and the concept of social responsibility. far from representing an handicap. and has been recently followed by the University of Paris-Dauphine. while at the same time taking advantage of the increasing willingness of the public to consume ethical products. Hafsi. T. La Tribune. « Environnement intense et choix stratégiques. Le cas des banques islamiques ». 2007. and may rise up to 1000 billion in 2010. In Europe. “La finance islamique de plus en plus courtisée”. growth dynamics make them focus less on the Islamic dimension. Rocafull. in fact. justice. competition and financial institutions foster new strategies as well as product innovations which enable these banks to address the challenge of global competition. ethical and religious constraints imposed on Islamic banks have actually allowed them to grow rapidly: the authors show how. we may consider that Islamic management has been able to transform itself into a set of deontological and universal principles. Johner. T. L.Islamic Finance. so as to reach a new audience of non-Muslim consumers as well.

which are still deeply influenced by the heritage of colonialism initiated in the XIX° century. To what extent does an increased awareness about ethics on both sides of the Mediterranean mean fulfilling one of the basic conditions of sustainable codevelopment in the area? At this stage. on the contrary. Promoting business ethics to support sustainable development in the Mediterranean Many difficulties actually hinder the spreading of ethical behaviours to support a sustainable development of economic exchanges: deriving from the gap existing in social and legal situations. 2. 2. it is necessary to wonder about the difficulties that might hinder or slow down the achievement of this particular objective. they lead to a variety of negative effects that cannot be overcome. which sometimes conflicts with other traditions and habits. etc. European companies could tend to see themselves as being the messengers of universal business ethics. For instance. notwithstanding these actually have Anglo-Saxon origins. intellectual property.North Mediterranean companies increasingly interested in sustainable development and fair trade. By “ethics” we mean here a set of common rules related to accounting and finance. US law forbids bribery both inside the US and abroad while. in other countries.1. should only refer to those of the country where its business is located – which are usually less restrictive. Ethical and universal rules – the Gresham law In the context of North-South economic relationship.. One of the issues to be addressed is whether a company should abide by the laws of its country of origin or. law. except within the framework of an increased level of social responsibility from companies. bribery is .

HSE. some companies were trying to be seen as exemplary under such a profile. duration of working hours.2 Negative effects of Gresham’s Law The attack that caused the death of several members of DCN (nota: a French Defence industrial company) staff in Pakistan illustrated how dramatic security issues could be for western companies operating in the Muslim world. Gresham’s law. the implementation of the OECD anti-bribery convention helped to be more aware of some pitfalls: . wages. or bring some . non-respect of ethics is undoubtedly of more concern in the Arab-Islamic world.considered a common practice to make business. they may thus get into a vicious circle that eventually does not foster ethics. as it has been going through political tensions and social violence for many decades. We may conclude that as far as ethics are concerned. Yet.on the other hand. with the aim of discrediting their competitors and accusing them of bad practices.on the one hand. the companies that will survive are well aware that they are mainly expected to maximize profits. or discriminations. by-passing the new regulations. 2. but that was mainly for communication purposes. which states that bad practices drive out good ones under legal tender laws (“bad money drives out good”). the risk of losing a bid due to disrespect of local habits was leading other companies to find out new ways to operate. . although we still do not know what the conclusions of the inquiry will be (and could either confirm the hypothesis of a retaliation act due to non-respect of a secret bribery agreement. often applies: in a competitive environment. Similar difficulties may occur concerning labour laws or children workforce. In this respect.

who prefer to rely on corrupted local ruling elites. we may point out the fact that the same consulting firms have perfectly understood the link between criminal risk management and sustainable development. which are all the more prone to violence as they have no other opportunity to give their views and make their voices heard. which do not have enough resources to face this kind of risks. are sometimes obliged to give up the idea of investing in a given country. a number of small and medium enterprises. We do not aim here to launch a debate about the reason for such an unstable political and economic environment. 2. On the other hand. We may express the same idea under the form of a paradox: non-respect of ethics from multinational companies systematically legitimizes radical Islamist groups. Whether involved or not in condemnable practices.3 Ethics and cross-cultural management to support sustainable development . due to unstable business environment: beyond the terrorist threat that we previously referred to. they also consider that the importance of the underground economy in South Mediterranean countries makes it difficult for them to open local branches. yet. Terrorist attacks and political or criminal kidnappings are now one of the threats multinational companies are faced with. as they are seen to convey behaviours opposed to ethics and Muslim dignity. It is obvious that cynical investors. are in part responsible for the reactions of Islamic opposition groups.evidence about the involvement of an extremist Islamic group not directly linked with the context of DCN activities in the country).from which multinational companies should profit. and now include this dimension in their services. multinational companies have unfortunately become the target of regular attacks. while these are gradually running out and giving way to a new phenomenon.the emergence of Islamic management. and this has led consulting firms to offer both risk assessment services and operational solutions aimed at making their clients’ international development safer protecting their staff and physical infrastructures.

political scientist François Burgat provided a rigorous criticism of mass media responsibilities in lumping together Muslims. Paris. . using codes of ethics for marketing and communication purposes only would be a mistake which could have serious and negative impact.Elaboration of anti-corruption codes. Southern entrepreneurs undoubtedly have a better understanding of Northern societies than the other way round. 2005. Burgat.Implementation of humanitarian policies for the benefit of local people. The principle of responsibility should consequently prevail. we can state that people perceive Asia in a far more positive way: China and Japan are seen as exotic countries and therefore raise curiosity.etc. and European schools and universities should make an effort to learn managers how to operate within the Euro-Mediterranean framework. . which could help to fight all kinds of misunderstandings and prejudices that hinder trade development. In comparison. As far as 5 F. Islamists and terrorists. The objective of a better acknowledgement of ethics will also be achieved through enhanced cross-cultural management. From this point of view. In one of his books about Islamism5. L’islamisme à l’heure d’al-Qaida. It does not seem excessive to state that to many Europeans no other area inspires more negative clichés and negative images than does the Southern Mediterranean. it may be translated into concrete actions: . so that Gresham’s Law does not apply to Euro-Mediterranean relationships. .As managing risk through promoting sustainable development consists mainly of raising awareness about ethics. .A commitment to safeguard the environment in operation areas (see some oil industry companies called into question by NGO for their polluting practices) . éditions la Découverte. Obviously.

. on the contrary. It mainly comes from experts specialized in political and social issues. As Edward Said noted in his famous book on Orientalism6. Final remarks and proposals Networks such as UNIMED and the Réseau Méditerranéen des Ecoles de Management (Mediterranean Schools of Management Network . which come up quite frequently: religious fanatism.e the sayings and living habits of Prophet Muhammad) and sîra (biography) of the Prophet E. as a fundamental condition for sustainable development in the region. the images that mainly come to mind have negative connotations. except for aspects mentioned in the first part of this article. associated with a supposed “Oriental psychology”. many ways may be envisaged. these images were built over centuries and are therefore difficult to eradicate. having little interaction with business schools. both theoretically and empirically. supposed inclination to corruption (c. which derives from Persian and Arabic) and to cheat and deceive. 1980. Paris. most of the research conducted on Islam has rarely addressed the issue of corporate management. L'Orient créé par l'Occident (traduit par Catherine Malamoud).the Muslim world is concerned. the status of women. we should rather encourage education to address the Muslim world without prejudices and to show that its values are fully coherent with European managers’. In this regard. this is an interesting and strategic issue. On the theoretical level. However. i. éditions du Seuil. and many aspects are still to explore. 6 .RMEM) are expected to convey such “business ethics” in the Mediterranean area. we may quote three of them. a new reading of Quran.f. as far as traditional management is concerne. of sunna (the tradition. the most used word “bakchich”. Enhancing research on Islam and corporate management Up to now. Saïd. which have to do with research and education. L'Orientalisme. In this context.

Revue française de gestion. . speculating on the market without purchase intentions.belonging to the Muslim community (umma) -. we need to elaborate case-studies that help to address some specific issues.with a corporate perspective will first allow us to highlight the reference embodied by Muhammad himself for the new Muslim managers. a well-known top-ranking businessman whose success has more to do with his talent than with his initial heritage. where shûra (conciliation) is part of the summons made by Allah to Muhammad7 and thereby of Muslim law. d’Iribarne. which establishes the prohibition of selling goods without owning them. as has been done to relate the successful implementation of a total quality management plan in a Moroccan branch of a multinational company8. On this issue. and who is presented as a devout person willing to act for the sake of his community.female managers (cf. to analyse their links with Islam as a religion and the way they claim it played a positive role in their carrier as businessmen. which marketing and Islamic finance try to capitalize on. Le rôle d’un univers de sens ». . and so on. P. widely dealt with in fiqh. 159.the decision-making process and dispute resolution in Islam. « Islam et management. as well as a very good manager. 2007. From an empirical point of view. . Coran. Theoretical aspects will also include: . selling fruits still hanging on the tree. who focus on the fact that he was a successful entrepreneur operating with his wife Khadija. Khadija. it could be useful to study success stories of Muslim businessmen. already quoted above).the re-discovery of Sufism in a way that is similar to the European interest in different personal development techniques. n°171 . both in conducting war and organizing the Islamic ethics. 7 8 Cf. but some of them may be quoted. III. There are many examples.the importance of membership feeling . . such as Saudi prince al-Walid bin Talal bin Abdulaziz alSaoud.

the Arab League and the Spanish government. . Not since there would not be any interest. The first attempt to respond the challenge of a multicultural teaching that could be adapted to audiences coming from both sides of the Mediterranean was given by the Euro-Arab School of Management (EAMS). while best students generally choose to study in the US or in Europe. yet. since they were having difficulties selecting professionals that would be trained both in general management and shari’a: most The school was mentioned in the Barcelona declaration as an example of Euro-Arab cooperation.An appropriate educational framework to meet contradictory requirements The Islamic banks referred to in the Part 1 were the first to advocate setting up of an Islamic MBA. but most 9 http://euromed. Let me quote the comments posted by Professor Walter Baets on the Euromed blog on the 26th of September 20079: “It proved extremely difficult to create an MBA that would at the same time address a large community (hence being mainly virtual) and being culturally relevant for Europe and the Arab world. seem reluctant to study in Saudi Arabia or in any other Gulf state. In the meantime. the low development of Islamic finance in these countries may hinder their capacity to take full advantage of their training.html. European students who are likely to deal with Islamic finance at a certain stage of their carrier. On the other hand. but European Schools of Management offer them very few opportunities in this particular demain. The question is to understand if such a programme might prove successful in North Africa and in the Middle East. the second category would prevail. The demand for a specific course of study seems thus to be extremely high from banks. insurance companies and hedge funds. it was closed last year. but it closed in 2006. established in 1994 in Granada within a joint initiative of the European Commission.

the solution might consist of new agreements between schools and universities. *** Thomas Giudicelli obtained a master’s degree in Management from the ESCP Europe. These are some of the questions. Another priority is to carry out an in-depth analysis of the reasons for EAMS failure. beyond some anecdotic factors which might have played a role10. to which a research work should try to give answers. What was the percentage of students by geographical origin? What were their expectations? Was their satisfaction rate tested? What kind of openings were given after this course. while it seems that the main difficulty consists of bringing people from different cultural origins to work together . a networking strategy can be the only basis on which to build a kind of Mediterranean course (with a degree as a potential recognition).even in a virtual place.probably since we are not yet able to define an MBA that is culturally relevant for non mainstream thinkers.”. without the limitation of insufficient internal resources and keeping in mind the objective of solving the problem of geographic selection (Europe-US vs. etc. Universities of the Southern shore). allowing them to deliver courses “on demand”. . seems to have been very controversial inside the institution . which would allow to share the investment needed to achieve such a goal. This text should have been at first presented at the "3° colloque du Réseau Méditerranéen des Ecoles de Management". scheduled at Marseille last December and subsequently canceled 10 Former EAMS managing director. From this point of view. as was the case of EAMS. his Opus Dei membership may not have been the best way to be legimitate. In any case. Alberto Ribera. and a degree in Arabic and Islamic studies from the PISAI. both quantitative and qualitative.

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