TOPIC 3

ISLAMIC SCHOOL OF
THOUGHTS AND THEIR
INFLUENCE IN BUSINESS
AND MANAGEMENT

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Islamic jurisprudence has developed over fourteen
centuries. Over that span of time, various schools of
jurisprudence have emerged, each with its own
interpretation and application of the Sharia.
Many schools splintered farther, creating schools
following different interpretive approaches and
applications.
Jurisprudence = the theory or philosophy of law
The flourishing abundance of ideas and views attests to
the intellectual depth and breadth of Islamic
jurisprudence.
However, nothing precludes a given state from codifying
the Sharia so as to provide for more certainty of the law
and clarity and consistency in its application.
• The Sunni tradition, which today comprises
approximately 85-90 percent of all Muslims,
differs from Shia tradition, which comprises the
remainder of the Muslim world.
• The distinction between the two traditions
essentially derives from different approaches
to governance.
• The Sunni believe, based on specific provisions
of the Qur'an and the Sunna, that the Muslim
people are to be governed by consensus (ijma')
through an elected head of state, the khalifa,
according to democratic principles.
• The Shia, however, believe that the leader of
Islam, whom they refer to as the imam rather
than the khalifa, must be a descendant of the
Prophet. The concept is the basis for a
hereditary hierarchy in the Shia tradition.
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Business is an important activity in the
economic and social life of the people,
extending to individual, societal,
regional, national and international
levels. ... Islam greatly encourages
business because it directly contributes
to improving the standard of living and
providing worldly comforts to mankind.

According to Islam, there is nothing wrong

in fair trade and commerce. In fact, a
businessperson who performs his business
operations with honesty and in
accordance with the commands of Allah
deserves to be rewarded by Allah in the
life hereafter (Akhirah).
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How To Do Business in Islamic Countries ?
Contracts should be fair to all parties. Partnership
is preferred over hierarchical claims.
Speculation is prohibited. "They don't like
gambling,"
Interest is prohibited. "This is the probably the
thing that is most often identified with Islamic
finance. ...
Compassion is required when a business is in
trouble.

Islamic business ethics is defined as the code of

moral principles that are prescribed by the
Quran and Sunnah (Hadith or sayings of
Prophet Mohammad). ... Ethics and moral
principles do guide one's behavior. Moral
principles prescribe what one should do or
abstain from doing.

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What is Islamic Business Law? Since 1980s there is a
'Islamic law' covers all aspects strong movement towards
of human behaviour. It is much Shari’a compliance product
wider than the Western
and services.
understanding of 'law', and
governs 'the Muslim's way of
life in literally every detail and,
of course, it also regulates
commercial transactions. ...
The Shari'a has long been
abandoned and substituted by
Western law.
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What does riba means in Islam?
Riba is a concept in Islam that
refers broadly to the concept of
growth, increasing or exceeding.
It has also been roughly
translated as illegal, exploitative
gains made in business or trade,
under Islamic law.

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What does the Quran say about wealth?
In Islam, wealth is considered a bounty of God
and thus it is not scarce, for Allah says: “God is
rich but you are poor” (Muhammad:38). What
is actually scarce is the ability of mankind to
utilise the bounties of God.

Is investing in money haram in Islam?

Investments are banned in companies with too
much debt as a percentage of their assets.
Interest on loans (known as riba) is also haram,
which rules out investing in conventional
banking and insurance sectors.
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Is Margin Trading allowed in Islam?
Margin trading, day trading, options, and
futures are considered prohibited by sharia by
the "majority of Islamic scholars" (according to
Faleel Jamaldeen).

Is trading in futures halal?

Futures and forwards contracts do not include
currencies assets to avoid riba and they are
only traded on spot market hand to hand. Also
as important, futures and forwards contracts
must be conducted on halal products or on
assets that are accepted in Islamic law (halah
commodities).
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What is haram money?
Examples include money earned through
cheating, stealing, corruption, murder and
Interest or any means that involves harm to
another human being. Also, a deal or sale
during Friday's prayers salat al-jumu'ah. It is
prohibited in Islam for a Muslim to profit from
such haram actions.

Is buying shares Haram in Islam?

Islamic principles require that investors share in
profit and loss, that they receive no interest
(riba), and that they do not invest in a business
that is prohibited by Islamic law, or sharia.

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Is gold trading halal in Islam?
Under Sharia law, gold is generally
considered a “Ribawi item,” meaning
Muslims can't trade it for future value,
or for speculation. They can, however,
use gold as a currency and own it as
jewelry.
Is short selling allowed in Islam?
While short-selling is not permitted by
the Shariah, more and more Islamic
institutions and hedge funds claim to
offer Shariah-compliant shorting
solutions. Islamic short-selling is often
being presented as if it were a major
innovation or a significant breakthrough
for Islamic finance
The six substances (items) that are sold by weight
and measure, literally: gold, silver, dates, wheat, salt
and barley. Exchanging these substances in kind must
be in equal measure and with immediate transfer of
possession (qabdh) in order to avoid exchanging
unequal amounts (measures and weights) or the so
called riba in trade (riba al-fadhl). If carried out in
conformity to these conditions, then the exchange is
riba-free (i.e., halal/permissible/shari’a compliant).
Short selling is a fairly simple concept—an investor
borrows a stock, sells the stock, and then buys the
stock back to return it to the lender. Short sellers are
betting that the stock they sell will drop in price.
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Is insurance haram or halal?
Most Islamic jurists conclude that conventional
insurance is unacceptable in Islam because it
does not conform with sharia for the following
reasons: Conventional insurance includes an
element of al-gharar or uncertainty.
Conventional insurance is based on the concept
and practice of charging interest.

Is dividend investing halal?

Interest on loans (known as riba) is also haram,
which rules out investing in conventional
banking and insurance sectors. Investing in
companies earning a minimal amount of
interest, typically 5 percent or less, may be
allowed, so long as the dividend income
derived from that interest is donated to charity. 15
Can Muslims receive interest?
A Muslim is not allowed to benefit from lending
money or receiving money from someone. This
means that earning interest (riba) is not
allowed – whether you are an individual or a
bank. To comply with these rules, interest is not
paid on Islamic savings or current accounts, or
charged on Islamic mortgages.

Can we take loan in

Islam?
YES…..the loan must be
interest-free.
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Entrepreneurship and Management in the Islamic Context

With the evolution of international business environment where culture and religion are playing an
important role cornering developing relationships (Dana, International Journal of Entrepreneurship and
Innovation, 10(2):87–99, 2009; Dana, Entrepreneurship and religion, Edward Elgar Publishing, 2010),
Islamic entrepreneurship and management is becoming an essential research field (Ramadani et al.,
International Journal of Business and Globalisation, 15(3):244–261, 2015).

Islam, as a religion, highlights the importance of being engaged in business activities that improve society
as a whole, and many of the limitations placed on Muslim entrepreneurs are meant to reduce activities
that can harm the society; Muslims are expected to make a living in accordance with the beliefs of the
Qur’an and Shari’ah laws.

When Muslims engage in entrepreneurial activities it is believed that they fulfill their religious obligations
to please Allah. Islam shapes entrepreneurship at different levels of the economy whilst encouraging and
enabling entrepreneurial activities.

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Micro-Entrepreneurial Motivations in Ghana: Do Muslims Differ? CASE STUDY

The study sought to establish if Muslim entrepreneurs differed in their

entrepreneurial motivations compared with entrepreneurs of other faith.

The study utilized secondary data from the poor localities in urban Greater
Accra region of Ghana.

A regression analysis is used to establish the relationship between the

dependent variables and the Muslim dummy and other independent variables.

The study finds that Muslim entrepreneurs compared to those of other faith
are less likely to engage in entrepreneurship for profits or self-employment in
the study area.

Decomposition analysis reveals that the profit motive of Muslims is constrained

by their endowments or characteristics but enhanced by unexplained factors
which may be the religion effect. The study contributes to the
entrepreneurship literature by analysing the role of religion in determining
entrepreneurial motivations in an African country. 18
The Foundation of Islamic Knowledge Management Practices
This chapter is a brief description of the foundation of Islamic Knowledge Management (IKM), its functional
characteristic and dimensional practices. The philosophy of knowledge is an established discipline in human
civilization, especially in Islam. It is understandable that knowledge is a source of intellectual prosperity and
development.

Naturally, all aspects of human development such as social behavior, religiosity, political leadership, and
business transaction flourishes with the application of efficient knowledge management. This
understanding becomes evident especially within our contemporary globalization era and challenges.

The issue of managing knowledge is vital in refining current developments, achievements, and
performances, whether at individual or society level as well as the organizational level. Likewise, Islam
regards knowledge management as a fundamental principle of conducts and practices in all affairs. It is
embodied in a man as a society and cultural being with a divine trusteeship (amanah) as vicegerent
(khilafah) and moral agents of God on earth.

In short IKM is expected to fulfill the comprehensive understanding of science and philosophy structured by
religion with a reference to the highest source of knowledge as presented by the Quranic verses and the
Prophetic explanations.

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Islamic Economics: What it is and How It
Developed

https://eh.net/encyclopedia/islamic-economics-
what-it-is-and-how-it-developed/

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https://www.slideshare.net/EzzedineGHLAMALLAH/state-of-the-global-islamic-economy-report-201819

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