Beyond Good Practices and Standards: An Islamic Framework of Sustainable Business Practices for Corporate Organization

ABSTRACTThis article is an attempt to critically examine the economic logic of corporate organisation business practices. It is a clarion call to go beyond what is considered in our contemporary time good business practices. The aim of this paper is to explore why, how and when a business organisation may choose to go beyond good business practices and standards. In writing this article, the researcher sought to engage with modern secular insights about sustainable business practices for corporate organisations and to be in critical dialogue with those insights.The researcher have also sought to look critically at the Islamic traditions about good business practices and standards and restate some of them in the light of modern discourse. The researchers stand is within the Islamic tradition. This is an effort to bring religion into our economic lives, which invariably means bringing religious ethics into what is supposed to be free of such values. This article addresses the questions of how can corporations develop into responsible moral agents and what effective framework can be used for sustainable business practices within an Islamic setting? These questions are important because Muslims in business are sometimes confronted with the question: How can I do business and act ethically in a system that is not? This article proposes Islamic principles such as ikhlas (sincerity), ilm (knowledge), hikmah (wisdom), hilm (forberance) and rifq (gentleness), sabr (patience), tawaadu (humility), qudwah (good example), husnul-Istimaa (good listening), shajaaah (courage), karam (generousity). The article will also explore how these Islamic principles can be incorporated into business practices in order to have a sustainable business practices for corporate organisation.

Corporate governance is one of the most important failures behind the present financial crisis. De Larosi re Group (2009)This Report concludes that the financial crisis can be, to an important extent, attributed to failures and weaknesses in corporate governance arrangements. OECD report (2009)The business of business should not be about money, it should be about responsibility. It should be about public good, not private greed. Dame Anita Roddick

INTRODUCTIONIn 1970, Milton Friedman wrote an interesting article in New York Times Magazine where he was given credence to the idea that social responsibility of business is to increase its profits. When considering the implications of this statement some questions arises about the aim of businesses and whether it solely should be based on profits. This concern as led into the discussion on the social responsibilities of corporate organizations to their investors, employees, customers, and other individuals. It has also raised questiones, such as, how can corporate organizationsor more precisely the managers of corporate organizations - conceive business and their responsibilities? This is important because the manner in which a corporate organization understands business and responsibilities will determine how they deal with their local host communities, the attention they give to their employees and their product safety, and other similar matters.Over the last few decades, millions of individual business investors and stakeholders who have experienced significant reductions in the values of their investment portfolios can confirm the tremendous importance of trustworthy behavior. Financial markets lost much ground as a direct result of misleading statements and fraudulent accounting statements by analysts employed by highly respected investment corporate organizations. Instances like these have helped to teach a hard but important lesson: that a solid moral/ religio-spiritual foundation is necessary to our well-being as individuals and as a broader community with strong economic and moral interconnections. As a result, the climate of business seems to be open, once again, to discussion and action concerning moral matters. However, countervailing forces, such as short-term expectations and global competition, have also been at work to make the ability to actually practice good behavior in the marketplace more difficult. These forces seem to make the climate of business more hostile to ethical change. The discussions into the responsibilities of corporate organizations have led into the believe that a corporate organization should basically focus on increasing profits, provide stockholders with high returns on their investments, obey the law, and avoid deceptive business practices. All these we have termed in this paper the good business practices and standards. However, from Islamic business ethical stand corporate organizations are presumbly expected to do more than just fulfill these, but how much more? What in practical terms does it mean for a corporate organization to conduct business within an Islamic framework of sustainable business practices? All these and much more will be discussed in this paper.This paper dilates on the Islamic dimension to sustainable business practices for corporate organizations. Section II describes the issues at stake when business and mangement scholars talk about good business practices and standards. Section III examines the Islamic framework for sustainable business practices by focusing on the ethical values that makes corporate organizations sustainable. Section IV discusses in detail specific challenges corporate organizations are currently facing and how the Islamic Framework can help to ameliorate the challenges. In addition, I gave an example of a company that has incorporated some of these frameworks in its to show the universal nature of the value, since the company using these frameworks does not have Islam at the back of its mind but still show Islamicity in its dealing. The paper concludes that in order to have a sustainable business all sort of exploit or injustice are to be avoided by corporate organization. An Islamic framework for sustainable business practices for corporate organization encompass the interests of all stakeholders and management of corporations for the promotion of social justice and the avoidance of practices that involves greed, deceit, misrepresentation, and the misuse of wealth. It encourages a strong commitment to all stakeholders of corporations and transparency by board management in decision-making. Such a structure is important to the sustainability of any corporate organization.What is good practices and standards in business?In this section, we address how economist and business management scholars have explained what good business practices and standards are and should be for corporate organizations. Some scholars support the idea that the role and purpose of the corporation in society is to primarily seek to maximize profit for its shareholders while there are scholars who also maintain that beyond profit maximization for shareholders, corporations have the responsibility to serve other constituents and hold up broader social goals, even when these pursuits may sometimes reduce financial gain.Milton Friedman, a Nobel laureate in economics, in his classic essay The Social Responsibility of Business Is to Increase Its Profits argues that the primary duty of a corporation is to increase shareholder wealth. He states that when managers of corporations act in what we might call a socially responsible manner that in one way or the other directly resulted in reduction of profits, they violate their trustee duties to the owners of the enterprise. This theory is now known as the Shareholder Wealth Model or Custodian of Wealth Model of social responsibility.Carson (1993) wrote a critique of Friedmans theory and points out the inconsistencies in the theory. Carson insist that the idea of the one and only obligation of business is to maximize its profits while engaging in open and free competition without deception or fraud can be seen as contradictory to the idea that business executives are obligated to follow the wishes of shareholders while obeying the laws and the ethical customs of the society. Although in critiquing Friedmans Social Responsibility of Business, Carson also examines the theory in Friedmans earlier work Capitalism and Freedom. Carson notes that Friedmans position was first stated in Capitalism and Freedom while a substantially different version is presented in his later essay (p. 3).Carson (1993) in presenting the two formulations of Friedmans position, explains how they differ, and illustrate the differences by giving examples in which the two formulations yield different results. What Carson was able to prove from his examples is that both formulations have serious consequences which are seriously at odds with Friedman's intentions and stated views about specific issues. He went further to state that the problem of inconsistency can be resolved by opting for one or the other of the two formulations. However, in opting for either one of the formulation Friedman's intentions will not be fully served. Friedman also claims that when corporations management give to charity is actually stealing from shareholders, in fact he believes this is a tax imposition on the shareholders, which he describes as taxation with representation. This position is questionable because according to Carson in any corporation, it is possible for a group of shareholders to band together to try to force the company to pursue social objectives at the expense of profits. All investors are aware of these facts. Thus, all persons who buy stock in a company consent to a set of rules and procedures whose implementation may slightly reduce their return on their investment. In that case, reducing profits for the sake of social objectives would not constitute theft. Any use of my property in accordance with rules and procedures to which I freely consent cannot be a case of theft (p. 14). An alternative position on the idea corporate responsibility or what is called theory of the firm is the stakeholder approach. This has gained tremendous popularity in recent years among corporate executives, business and management scholars. Among the famous proponents of this approach is R. Edward Freeman. He observes that it may be more proper to talk about stakeholder approach in a discussion of this nature because corporate organizations are in a position to choose from a number of viable normative cores to help in balancing the claims of various stakeholder groups. Proponents of this approach also put forward the argument that the idea of sole consideration of shareholder interests can be considered ethically and morally insufficient. Rather, corporations should seek to broaden their duties and responsibilities to a large group of what they call stakeholders.Goodpaster (1991) details out the basic points of this approach, but the core of it is that corporations have obligations to those who have vested interest or stake in the company, rather than to owners exclusively. Since business transactions affect many constituents from business owners to consumers of products, corporations also have a ethical and moral duty to address the concerns of consumers, suppliers, employees, and broader members of the community. Goodpaster in his essay began by asking What is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? (p. 53). In answering these questions, Goodpaster observes that the connection between management and stockholders is ethically distinct in kind from the connection between management and other parties (like employees, suppliers, customers,etc.). This point was further explained when he notes that in thinking through the proper relationship of management to stakeholders, the fundamental features of business life which is the idea of good and proper manner of doing business must undoubtedly be recognized. Goodpaster describes this proper relationship of management to stakeholders and fundamental features of business life as that corporations have a principally economic mission and competence; that fiduciary obligations to investor and general obligations to comply with the law cannot be set aside; and that abuses of economic power and disregard of corporate stewardship in the name of business ethics are possible (p. 73) Although it must be noted that Goodpaster and Friedman postulations may appear similar, in that, they both recognise the important position of the shareholders, the major difference is who or what they regard as the shareholders. Where Friedman speaks of shareholders, Goodpaster prefers the terms stockholders and stakeholders. However, the crust of Goodpaster argument is not the ethical importance of stakeholder analysis (which he observes describes an ethically responsible management as management that includes careful attention not only to stockholders but to stakeholders generally [emphasis not mine] in the decision-making process) but with comparing the ethical relationship between managers and stockholders with their relationship to other stakeholders (p. 53). He states that this is almost as problematic as ignoring stakeholders (ethically) altogether, leading to what he calls stakeholder paradox.Also, Goodpaster suggests that the non-fiduciary interests of stakeholders be taken seriously on the basis that they can positively or negatively influence the short- or long-term strategic interests of a corporation. Goodpaster deems the consideration of the interest of stakeholders as strategic because they are seen instrumentally, that is, as factors potentially affecting the overarching goal of optimizing stockholder interests (p. ). An external force with lots of potential for either good will or retaliation. This idea of relaliation leads to another basis for taken the non-fiduciary interests of stakeholders seriously which is the legal aspect since they potential legal claimants. The significance of this is also seen in the fact that both conservatives and liberal view stakeholders interest recognise law and regulation as ground for stakeholders that goes beyond market dynamics, however, they differ about how much government regulation is socially and economically desirable.What is the Islamic Framework for Sustainable Business Practices?In conceiving the idea of an Islamic framework for sustainable business practices emphasis are placed on the noble qualities that Islam expects in humans such as; ikhlas (sincerity), ilm (knowledge), hikmah (wisdom), hilm (forberance) and rifq (gentleness), sabr (patience), tawaadu (humility), qudwah (good example), husnul-Istimaa (good listening), shajaaah (courage), karam (generousity). These qualities are originally the qualities expected from one who calls people to what is good and forbids that which is evil or bad as listed by Mohd Yusri Jusoh (2014). In order for such callers to be successful in their endeavour they are expected to imbibe these qualities. In this paper I have decided to bring these qualites to bear on the sustainable business practises since business are also engaged in a form of calling i.e. they want more people buy or use their product and for the businesses to grow and be sustainable. Hence, according to Islam, a corporate organisation - by virtue of its vested interest and responsibility towards shareholders, customers, employees, suppliers, neighbours, regulatory bodies, and society at large - is required or expected to have the qualities mentioned above for a sustainable business.In addition, what I regard as the Islamic framework in this paper alludes to Peter A. French (1979) postulation that corporation is a moral person. This is because corporations have internal decision making structure, rules and policies which qualify them for moral agent status. These controls make them beings with intention having same responsibilities and rights as persons. French argues that a moral person is the referent of any proper name or description that can be a non-eliminatable subject of the second type. The first type being when someone or thing did something. The second type is along the line of accountability or having a responsibility to act or having a liability to answer. This implies the presence of some sort of authority or relationship tying them to the act over the other person. In other words, in placing corporations under this scheme, one must attribute their actions to the corporations themselves and not to the people that comprise them such as the execs, directors and CEOs. Besides, if we attribute the actions to the people that comprise the corporation then we cannot distinguish logically between the corporation and a mob (he refers to the mob as an aggregate collectivity with no identity over and above that of the sum of the identities of its component membership). The main question French attempts to answer in his essay are: Do corporations really cause events to happen through their employees, or do the employees actually cause the events? Does the corporation have a reason for its actions (like a person would)? These questions were answered through what is called Corporate Internal Decision (CID) concept and its managerial influence on its corporation employees. This led to the conclusion that a corporate structure is greater than the influences of its executives or directors since a corporations aims go beyond the personal gains of its executives.Now let us look at the qualities that a corporate organization must imbibe as a moral person: Ikhlas (Sincerity)This is needed in transactions of corporate organizations. It is to engage in business or trade that is lawful and aiming for good. The Quran describes sincerity in relation to business when it says O ye who believe! Eat not up property among yourselves in vanities, but let there be amongst you traffic and trade by mutual good-will ... This shows that Islam promotes the need to trade but not just trading only for trading sake it must also go along with certain level of sincerity of purpose and encourging that which is good in business as well as avoiding the eating up of peoples properties and wealth unjustly. In engaging in business a corporation organization should be seeking to please those are dealing with and this can only be achieved if it is done with sincerity. Ilm (knowledge)This is another way in which a corporate organisation can sustain its business. This is an important requirement for a sustainable business for corporate organisation since the organisation must know what good product are available and how good their product is or can be and how to improve upon it to make it better. To extend this point further, for corporate organisations, it is necessary to they possess the knowledge of what is good and bad of their products and services as well as the differences between them, and it is necessary to know the situation they are appropriate to be used in order to guide those they will sell to or serve. This can also be linked to knowledge of the environment of the neighbourhood the business serves.Hikmah (Wisdom)This can be described as right and balanced way of dealing with issues that affects the corporation. It is to say and do the right thing in the right way at the right time to the right person. This has to do with soundness of management, the excellence of mind, penetration of the ideals of the company, the rightness of opinion and the awareness of the subtle actions that can distrupt the organization if not dealt with appropriately (Muhammad, 1975). The Quran also talks about Invite (all) to the Way of thy Lord with wisdom and beautiful preaching; and argue with them in ways that are best and most gracious. This can also be extend to the manner a corporate organization go about marketing and advertising its product and services. Corporate organizations must strive towards a wise and a beautiful approach that is devoid of rancour or hatred.Hilm (Forberance) and Rifq (Gentleness)This is needed by a corporate organization, especially when faced with opposition from opponents or competitors. The Quran in highlighting the importance of the quality says to Prophet Muhammad (and by implication to all Muslims): It is part of the Mercy of Allah that thou dost deal gently with them. Wert thou severe or harsh-hearted, they would have broken away from thee, so pass over (their faults) (Suratul Imran 3: 159). Since no corporation will like to loss its customers or people involved in the sustaining the company, this quality is highly required. A corporate organisation can not succeed without imbibing the culture of forberance and gentleness. In addition, Prophet Muhammad was reported to have said: Indeed gentleness does not enter into anything except it beautifies it, nor is it removed from anything except that it makes it ugly (Imam Muslim).Sabr (Patience)A business organization can not be sustainable if there is no quality of patience when dealing with challenges. Patience is required of those who wants to get as many people as possible to their sides. This is a quality required as a caller and this by extension can also benefit a corporate organization. This is because in doing business a corporation realises that there are quite a number of people that needs tremendous amount of proves in order for them to be convinced. This type of people, in a manner of speaking, will test the patience of the corporate organisation. A corporation that has imbibed the quality of patience will be able to maintain its ground and be willing to wait and keep trying in patience.Tawaadu (Humility)A corporate organization that show elements of arrogance in its dealing can not be sustainable in the long run. This is because no one will be interested in a corporate that tends to force itself or its views or way on others. It is also a way of building unique relationship between the organization and the consumers of their products and services. It helps to prevent the organization from behaving in a harmful way toward those they deal with.Qudwah (Good example)The idea of showing good example is also encourage in Islam. A corporate organization that wants its business to be sustainable must at all times show good example for others to follow. This good example will go a long way in making those having dealings with the organisation to be loyal and dedicated. It must be willing to a model for the people they serve and working towards all that bring good to them. The Quran chastise those who do not show good example thus: O you who believe! Why say ye that which ye do not? Grievously hateful is it in the sight of Allah that ye say that which ye do not (Suratul Saff 61: 2-3).Husnul- Istimaa (Good listening)Good listening is a very pertinent quality that a corporate organization requires. In order for the organization to grow and be sustainable, it must be attentive to the needs and feelings as well as the complaints of shareholders, employees, neighbours, suppliers and all stakeholders in general. This is a major way in which the organization can better improve itself and best serve the community. This is because without understanding what the stakeholders want the corporation can not be sustainable.Shajaaah (Courage)This is a quality that is encouraged in Islam. Courage is required in following through a decision that is right and might be a bit uncomfortable. It is needed in order to achieve at times long term goal. Courage is the strength that the corporation must show from within and without to be sustainable. This is because sacrifice must be made to maintain the organization and for the objectives of the company to be achieved, however, true courage and not recklessness (courage devoid of knowledge) must be shown.Karam (Generousity)This is an important quality of a caller. A corporate organization that does not have element of generousity in its dealing can not sustain itself. Generousity helps the organization to move and place its products and serves not just in the hands of the consumers but in their hearts. It helps an organisation to move away from qualities that can annihilate it such as cupidity, greed, shamelessness, impurity, extravagance, miserliness, ostentation, tendency to defame others or even competitors, preoccupation with useless endeavours, flattery, rejoicing in others misfortune and despising the poor. This annihilating qualities can not help an organization to maintain a sustainable business practice.

How can it (Islamic Framework) help practices of Corporate Organization?Askari, Iqbal, Krichene & Mirakhor (2010) and Iqbal & Mirakhor (2011) in their discussion on the corporate governance mention reasons for recurrent financial crisis that we often experience in our contemporary time. Some of the reasons highlighted are: failure of market discipline, short-sighted approach, breach of trust, failure of board oversight, failure of risk controls, and deteriorating business ethics and values. They argue that even the International Corporate Governance Network (ICGN) has argued that although corporate governance failures did not cause the financial crisis, they certainly aggravated it (p. 344). Let us discuss some these corporate governance failures and how Islamic framework for sustainable business practices as discussed in this work can help alleviate it.On Failure of Market Discipline, the financial crisis is said to have dealt a great blow to the widely held position that the invisible hand of the market would invariably make market players resolve conflicts through market discipline. This has been used to support the claim that there is no need to regulate the market. However, the realization that not only is the financial market information imperfect and deficient but that the market is been manipulated by market players for their personal interests. From the Islamic framework for sustainable business practice concept such as Hikmah and Shajaaah can best tackle this. Since what is needed is a robust enforcement plan that can help bring appropriate disciple and proper regulation of the market. On the issue of Short-Sighted Approach, this has to do with the fact that corporate organization are only interested in maximizing their share value. This has often led to failure to see the long term effect of some dealings (de Larosire, 2009). In addition, Shareholders are also known to pressurize management to dish out higher dividends for investors. This invariably lead to a situation whereby to exceed expected quarterly earnings is standard for many corporate organization. This can be countered from Islamic sustainability framework with the idea of Tawaadu and Sabr. These are qualities needed when faced with challenges that are beyond ones control. However, it does not mean one has to be lethargic. But that the corporation realizes the situation it has found itself and willing to go about resolving it carefully and cautiously. On Breach of Trust, the financial crisis that is currently been experience has affected the level of trust business executives, directors and CEOs of corporate organizations. This can be remedied with Husnul- Istimaa (Good listening), Hilm (Forberance) and Rifq (Gentleness). These are ways in which trust can be nurtured. An organization that show willingness to listen to those who are affected by its activities will go a long way in achieving its business objectives. Corporate organizations must make stakeholders feel comfortable in discussions by listening carefully and more importantly show sensitivity to stakeholders points of view. With good listening skills, corporation can accurately understand those they are dealing with and build trust. Same also goes for forberance and gentleness. Corporations organization need to understand that life is not an eternal bed of roses. There are bound to be knotty patches such as financial losses or even betrayal, but this does not give room for cutting corners thereby giving room to loss the trust of those they (corporations) deal with. Husnul- Istimaa (Good listening), Hilm (Forberance) and Rifq (Gentleness) are ways in which people hearts can be opened and trust can be strngthened. It can also lead to more good will for the organization, so that what needs to be done gets done quickly and effectively. On Failure of Board Oversight, this has to do with inability of some board members of corporate organizations to make appropriate policy and do a follow up. It is a situation in which board members do not simple do their job. This has even led to debate on the money being paid to some board members and whether they really worth such outrageous alllowances. At times, failure of board oversight is a result of lack of timely invention in a some matters that requires that needed to be prioritize. Failure to use proper risk management framework in place, they have been criticized for being too complacent and unable to prevent collapses. lax corporate governance meant that often no action was taken by senior management. Failure on strategy and oversight, misaligned or perverse incentives, empire building, conflicts of interest, weaknesses in internal controls, incompetence and fraud. The Islamic approach to solving this is the concept of Qudwah (Good example) and Ilm (Knowledge). Corporation organization should show exemplary character in their dealings. This can be done through being persuasive and positive and can also counter the issue of board oversight. In showing good example and knowledge through a persuasive and positive outlook corporations can sell their ideas and product effectively. In otherwords, by making their positions known in a well organized, clear and compelling manner; corporations and by extension board members of corporation will be respected as well as inspire enthusiasm among employees and other stakeholders. Another problem corporate organization is faced with is Failure of Risk Controls. This is a situation in which little control is shown in safeguarding against excessive risk. Even when signs of trouble appears, senior management are known to have judged it to be of little importance, apart from that the information was used in organizations was also a major contributor to this. From the Islamic point of view of sustainable business practices the problem of risk control can best be tackle with the concept of Hikmah (Wisdom). This can be seen as the outstanding ability to anticipate potential problems and developing effective measures to correct them. The concept of wisdom as referred to in this paper it is believed will lead to an effective risk control measure for corporate organization. This is in the sense that excessive risks can be checked immediately it is noticed and resolved before they become a serious issue. On Deteriorating Business Ethics and Values, this is a result of a decline in moral and ethical values in corporate organization. The management of these companies seem to be more interested in circumventing regulatory bodies and looking for shortcomings in the law rather than looking for what is the most appropriate thing to do. This is also a result of increasing love to show off personal empire rather than showing moral and ethical business leadership. A counter measure to this is a combination of all the ethical precept highlighted on the Islamic framework; Ikhlas (sincerity), Ilm (knowledge), Hikmah (wisdom), Hilm (forberance) and Rifq (gentleness), Sabr (patience), Tawaadu (humility), Qudwah (good example), Husnul-Istimaa (good listening), Shajaaah (courage), Karam (generousity). This is due to the seriousness of deterioration of business ethics and values. It does not only affects the corporation, but also various strata of the society. That is why the ethical values to solve it must touch both the external and the internal part of the problem. A combination of all these all ethical precept will lead to a suituation where all important decisions are taken carefully and methodically. The corporation will base decisions on relevant facts and input with consideration of long and short-range factors. The sensitivity of the organization to the impact of its decisions on other sections and on the organization as a whole will also be heightened. When the corporate organization decisions affect others, the corporation will solicit input and make effort to reduce any negative affects. This will invariably lead to wide acceptance and support for organization. Above all, the corporation will show clearly its understanding of its mission and the values by which it operates and that it is aware of how its mission and values is linked to the advancement of the society. The commitment and dedication to the corporation to these values will make it an excellent role model for those seeking to understand the values and how they impact day-to-day runnings and sustainability of the business organization. Another issue that has been noted to lead to crisis in corporate organization is Inappropriate and faulty remuneration system. Remuneration and incentive systems have played a key role in influencing the financial institutions sensitivity to shocks and in developing unsustainable balance sheet positions. Where there is disparity and asymmetry in the levels of remuneration that is awarded, it often affect the financial health of firms. This problem can best be resolved through the concept of Karam (generousity) and Ikhlas (sincerity). These two concept from the Islamic point of view have embedded in them the understanding and need for social justice and welfare. To this end, corporation organizations will do well when this understanding of social justice and welfare are ingrained in their system of remuneration. In other words, the inappropriate disparity in renumeration is morally obscene, economically unjust, socially intolerable and will ultimately lead to crisis. That is why through the concept of generousity and sincerity in remuneration corporate organization will also be seen as showing high moral and ethical conduct.

Table 1Corporate Organization Failures and Islamic SolutionsCorporate Organization LapsesIslamic Framework of Sustainable Business Practices for Corporate Organization

1.Failure of Market DisciplineHikmah and Shajaaah

2.Short-Sighted ApproachTawaadu and Sabr

3.Breach of TrustHusnul- Istimaa (Good listening), Hilm (Forberance) and Rifq (Gentleness).

4.Failure of Board OversightQudwah (Good example), Ilm (knowledge)

5.Failure of Risk ControlsHikmah (Wisdom)

6Deteriorating Business Ethics and Valuesikhlas (sincerity), ilm (knowledge), hikmah (wisdom), hilm (forberance) and rifq (gentleness), sabr (patience), tawaadu (humility), qudwah (good example), husnul-Istimaa (good listening), shajaaah (courage), karam (generousity)

7Misaligned and faulty remuneration systemkaram (generousity), ikhlas (sincerity).

An example that illustrate the importance of the values highlighted above for corporate organization can be seen in the In Albert Erisman and David Gill interview with Jim Sinegal, CEO of Costco. In the interview Sinegal mentioned some unique business practices he has incorporated into his organization. According to Rae & Wong (2004) Costco serves as an outstanding example of a firm that is trying to honor the interests of a broad range of stakeholders while managing shareholder expectations and the tensions produced by operating in competitive markets. CEO Jim Sinegal clearly describes the importance of emphasizing company values in building an organization that is sustainable and profitable for the long term (p. 162). Jim Sinegal was only trying to show how ethics and corporate responsibility play out in the retailing business that he knows well about. In the interview Sinegal gives a well-defined, sincere answers about the uniqueness of a corporate organisation that has a strong value in order to build a sustainable business firm that benefits a broad number of stakeholders (Rae & Wong, 2004).Table 2 Jim Sinegal on Ethics and Corporate ResponsibilityThe IssueJim Sinegal ApproachIslamic Value Reference

On Low Prices and High WagesJim Sinegal explained it should not surprise anyone that if you find good people, give them good jobs, and pay them good wages, good things will happen (p. 146). Another reason is that the company decided that it would take away any objections or questions a customer might have, such as perhaps it could be treating our employees unfairly in order to sell things at low prices. The company also decided to establish a stronger and better guarantee of satisfaction on every product it sold, that would exceed the warrantee offered by any other company. According to Sinegal, the company has the same attitude toward our suppliers and everyone else who has contact with our business.We operate this way because we believe philosophically that this is what we should be doingbut we also do it because of the nature of our business... (cited in Rae & Wong, 2004, p. 146).His response a reference to the qualities of Karam (generousity), Ikhlas (sincerity).

On the idea that investors might pressurize the company to increase quarterly profits and raise shareholder value by cutting wages and raising prices as the market dictates or allows.Sinegal explains that although that is not unreasonable for those in business since many many often see business as buy low sell high. He states But thats not our job. Our job is to build the company, hopefully one thats going to be here fifty years from now. You dont do that by changing every time the wind blows in a different direction. The things that we do are basic and intrinsic to our business and our company. Our reputation for pricing is an example.We have sweated over this for years. Why would we sacrifice that just to make a quarterly target? It wouldnt make sense sacrificing everything, risking our whole reputation. We believe our strategy will maximize shareholder value over the long term. We have a reputation for pricing. Why would we sacrifice that just to make a quarterly target? (cited in Rae & Wong, 2004, p. 147)His response a reference to the concept of Hikmah (Wisdom) and Shajaaah (Courage).

When Sinegal was asked about the incentive for investors since customers and employees have theirs.He reponded that The record shows clearly that we are successful over the long term. I dont know what the exact number is but look at our return over the past five or ten or fifteen years. Our mission is to do four essential things: obey the law. . . . take care of our customers . . . take care of our people . . . and respect our suppliers. If we do these four things, and do them consistently, we will succeed as a business enterprise that is profitable and rewarding to our shareholders. It is possible for some to ignore these things and reward their shareholders in the short term but not for the long term.We feel an obligation to build businesses so that communities can count on us being there, suppliers can count on us being there, employees can count on the security of jobs, and customers who shop with us know that they can count on us. When they buy a washing machine or a television, were still going to be around a couple of years from now (cited in Rae & Wong, 2004, p. 147).His response a reference to the idea of Husnul- Istimaa (Good listening), Hilm (Forberance) and Rifq (Gentleness).

In responding to the question What in your view makes a good CEO?Sinegal answers: Good leaders make the determination how to run the company and then communicate it to everyone in the company so that they all understand it. Honesty and doing the right thing cannot be the responsibility of management alone. Every level of the company should understand what the rules are and every employee in the company should be mortified if the company and its people dont do what they are supposed to do. The attitude has got to be pervasive throughout the organization:We dont do that kind of stuff around here! Period!( cited in Rae & Wong, 2004, p. 147)He further explains that the company is not just looking for character and ethics, but also intelligence, industriousness, integrity, for someone faster than a speeding bulletall of those things you want in a manager. If you start off with integrity, financial integrity as well as intellectual integrity, youre starting on a pretty good base (cited in Rae & Wong, 2004, p. 147). In addition, Sinegal explains that values and integrity runs through the ranks of company from way down to the forklift driver to the mail delivery person. That is because as an organization, they make sure they are consistent. By consistent he meant You put in place simple guidelines on how you run your business and then follow them (cited in Rae & Wong, 2004, p. 147). He then went further to give examples One guideline we follow at Costco is that no employee who has been with us for more than two years can be fired without the approval of a senior officer in the company.We think an employee who has been with us two years is entitled to that. No manager can come in on a bad day and decide some employee is history. There has got to be a review process. Is it perfect? Of course not.Were fallible. But it is one of the things that we do to show respect to our employees. Another example is our open-door policy. People have a way to voice their grievances and get them addressed. All 100,000 employees cannot run to me (although sometimes it feels like they do) but I do take on some. It would be a very rare day that I dont get a couple of calls from employees. But think about this: if warehouse managers know that their own regional bosses have open door policies and will talk to any employees about their issues, then they are going to be a little faster to talk to the troubled employees themselves. They dont want the problems to come back to them through their bosses. They are smart enough to figure out that it is their responsibility to take care of things at their level (cited in Rae & Wong, 2004, p. 147).His response a reference to the notion of Qudwah (Good example), Ilm (Knowledge).

Consistency in the companys culture and valuesEventhough Costco has around 100,000 employees Sinegal says he tries as much as possible to maintain consistency in the companys culture and values by going get to every warehouse owned by Costco at least once a year. He states that that is easy for him since it is what he does for a living and because I love the business and I enjoy doing it. It is important that those in management get out there and understand where the business is. Otherwise your business is going to fall apart on you (cited in Rae & Wong, 2004, p.148).His response show the qualities of Ikhlas (Sincerity), Ilm (Knowledge), Hikmah (Wisdom), Hilm (Forberance) and Rifq (Gentleness), Sabr (Patience), Tawaadu (Humility), Qudwah (Good example), Husnul-Istimaa (Good listening), Shajaaah (Courage), Karam (Generousity)

Extensively incorporated technologyThe company has also extensively incorporated technology because as Sinegal mentions it helps us become more efficient and productive but our business still has a lot of art as opposed to strictly science (cited in Rae & Wong, 2004, p. 148). He further asserts the reason that the dot-com companies didnt succeed is that they were very good at the science end but they didnt understand anything about the art of buying and selling merchandise. They thought that was the easy part but it turned out to be the most difficult...But buying and selling merchandise is the business. These other things augment your running the business but they arent the driving force. If you dont have the right merchandise in the right place at the right time you can forget about everything else. All the satellites in the world arent going to help you. The reason the dot-com companies didnt succeed is that they were very good at the science end but they didnt understand anything about the art of buying and selling merchandise. (cited in Rae & Wong, 2004, p. 148).The response shows the importance of Hikmah and Shajaaah

Support for Small BusinessesHe notes that for any business to survive it depends on the quality of the individual merchant. Those who run their businesses in an efficient manner are going to survive (cited in Rae & Wong, 2004, p. 149) That is why Costco also emphasis on supplying and also preserving small businesses rather than replacing them entirely. Sinegal recognises that importance of a business customer. However, the company does not only focus on them but also deals with nonprofits organizations like churches, schools, and sports teams. In addition, Costco helps small businesses improve their operating structure by giving business advices on how to run a business, how to get staff, how to hire consultants, among others.The response shows the understanding of the concept of Karam (Generousity), ikhlas (Sincerity), Qudwah (Good example), Ilm (Knowledge).

On the idea of globalizing the companySinegal notes that every country is different, however their recognition of value is constant. That is because value is welcome everywhere, although how the value works may be different. He also notes that [t]he keys to doing international business are to understand local rules and laws, recognize what customers want to buy, and take care of our employees. Whether in the UK or Canada or in Mexico, were going to measure ourselves against every other retailer and make sure that were paying higher wages than anyone else.We would like to be able to turn our inventory faster than our people because excessive turnover of people is very costly (cited in Rae & Wong, 2004, p. 150).The response shows the importance of Tawaadu(Humility) and Sabr (Patience).

On expansion of the company into new product areasthere is always a strategy of trying to bring new products and new services to the customers on an ongoing basis. However, the question that the company mangement always keep in mind is whether we can we do it well and provide value for the customer. If we think we can, were prepared to try it (cited in Rae & Wong, 2004, p. 150).His response shows and understanding of Qudwah (Good example), Ilm (knowledge).

On whether there are policies for buyers to investigate how products are manufactured, e.g., probably there is child labor or slave labor involved.Sinegal states: We also have a code of conduct for our suppliers that demands that they have to meet the laws of their own country, pay the right wages, and not use child, slave, or prison labor, etc....Bribery is clearly the worst. As an American company we cant get involved in bribery because of the Foreign Corrupt Practices Act.We have a conduct policy for our suppliers. We visit our supplier factories on a regular basis to make certain they are complying with our standards and values (cited in Rae & Wong, 2004, p. 150). The response can be linked to the reference on Husnul- Istimaa (Good listening), Hilm (Forberance) and Rifq (Gentleness).

On corporate scandalsSinegals view on corporate scandals also highlight some of the cogent issues raised in this paper. He believes that the gates were too wide open, with too many opportunities. Clearly thats something that has to be taken care of. But no matter what types of rules and regulations, no matter how many committees are set up, bad guys are still going to figure out some way to do wrong. The good news is that there arent that many bad guys. Most business leaders are trying to run their businesses in an ethical fashion. I think the biggest single thing that causes difficulty in the business world is the short-term view.We become obsessed with it. But it forces bad decisions (cited in Rae & Wong, 2004, pp. 150-151).His response shows the importance of this values Ikhlas (Sincerity), Ilm (Knowledge), Hikmah (Wisdom), Hilm (Forberance) and Rifq (Gentleness), Sabr (Patience), Tawaadu (Humility), Qudwah (Good example), Husnul-Istimaa (Good listening), Shajaaah (Courage), Karam (Generousity).

On the issue of time, reflection, pace of the world, the quantity of information, and competitive pressures;Also Sinegal notes: You have to schedule it. You have to plan the opportunity to think about your business and plan what youre going to do. Otherwise youre just a hamster running on a treadmill; youre never going to get anywhere.Youve got to schedule it. Strategic planning is an important part of running any business and the more so for businesses that are operating in multiple states and countries (cited in Rae & Wong, 2004, p. 151)A reference to the importance of Ikhlas (Sincerity), Ilm (Knowledge), Hikmah (Wisdom), Hilm (Forberance).

On the future plans of the companySinegal as got this to say: Were not kamikaze pilots.We want to do things in a sensible fashion. If we can speed up our growth, without outdistancing our management team, and provide a quality product, then we will do so. Aside from the quality issues and wanting to grow the business in a sensible fashion, we dont have any grand scheme that says, for example, that we have to be in Latin America by the year 2015 or have 1000 Costcos in ten years (cited in Rae & Wong, 2004, p. 151).Response shows the importance of the concept of Ilm (Knowledge), Hikmah (Wisdom).

CONCLUSIONThis paper examines the centrality of strong ethical values in building a sustainable business enterprise through an Islamic eyes. The paper scrutinizes what is often regarded as good business practices and draws on Islamic ethics to get behind, go beside, and move beyond it in an effort to understand how deep, engaging and socially rich Islamic practices to business are when it steps into the corporate world. This paper also reveals how bringing this Islamic approach as highlighted in this paper requires enormous will and dedication on corporate organizations.To be sure, the message here is that improving the ethical climate of business is that ethics derived from the Islamic tradition has much to contribute to sustainability of business. Although the business world may not be Islamic and may not readily accept ethical guidance couched in faith-based language, many of the ethical constructs derived from the Islamic faith can also be communicated in language that appeals to the broader marketplace. My goal is to encourage instilling values that are based soundly on the Islamic faith in corporate organization.It must be emphasis that my aim is not to condemn profit-making but the narrow pursuit of profit should be avoided. Profit-making should be within a framework of what is right and balanced. As in all human pursuit, self-interest is a natural motivating force but self-interest has to be linked to the overall concept of good and justice. Reward for effort and suffering for failure in effort provide the best framework for human society and the economy. Islam acknowledges it and accepts it as a first principle for economic and social effort. But Islam also lays down a moral framework for effort, spelling out values and disvalues, what is desirable and what is reprehensible from a moral, spiritual, and social perspective. This is a way of slowly constructing an operational framework that is beyond good business practices and standard but also based on ethics, justice, and morality.

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