ABSTRACT. As global business operations expand,managers need more knowledge of foreign cultures,in particular, information on the ethics of doingbusiness across borders. The purpose of this paperis twofold: (1) to share the Islamic perspectiveon business ethics, little known in the west, whichmay stimulate further thinking and debate on therelationships between ethics and business, and (2)to provide some knowledge of Islamic philosophyin order to help managers do business in Muslimcultures. The case of Egypt illustrates some divergencebetween Islamic philosophy and practice in economiclife. The paper concludes with managerial implica-tions and suggestions for further research.

KEYWORDS: business ethics, Egypt, Islamic businessethics, Muslim culture

Introduction

Over the centuries, as state and church separated,particularly in western societies, religion becamea private matter. The so-called value-freesociety developed and economists focusedexclusively on the mechanics of economics.There is a growing realization that value-freeeconomics is a misnomer. Post-modern thinkers

have advocated changes over the past few decadesand there has been a reintroduction of a moraldimension in business.

An important task for many managers is howto integrate this moral dimension into businessconducted across borders. Managers need anappreciation of the ethical norms of differentgroups and cultures in order to gain completeunderstanding of the cultural environment inwhich the firm must operate (Al-Khatib et al.,1995). Relatively few empirical studies haveaddressed culturally-related ethical issues (see forexample, Becker and Fritzsche, 1987; Akaah,1990; Vitell et al., 1993; Nyaw and Ng, 1994).Based upon the results of a study that found somesurprising significant differences between thevalues of American and Thai marketers,Singhapakdi et al. (1995) suggest that multina-tional corporations should train their marketingprofessionals differently in different parts of theworld. Amine (1996) goes further and urges thatthe role of global managers should be one ofmoral champions, committed to pursuing thebest in ethical and moral decision-making andbehavior. The definition of best is not an easytask, however, when one takes into account themany different moral philosophies that exist.

In recent years there have been a number ofarticles published in the

Journal of Business Ethicswhich have discussed the positions of variousfaiths regarding the relevance of religious ethicalprinciples to business decision-making (see forexample, Williams, 1993; Green, 1993; Rossauw,1994; Gould, 1995). The Popes CentesimusAnnus argues that what is lacking in our time isa moral culture capable of transformingeconomic life so that it has a context in ahumane community (Williams, 1993).

Islamic Ethics and theImplications for Business Gillian Rice

Journal of Business Ethics 18: 345358, 1999. 1999 Kluwer Academic Publishers. Printed in the Netherlands.

Gillian Rice is Associate Professor of Marketing atThunderbird, The American Graduate School of Inter-national Management. Her research includes study ofeconomic development, environmental concerns and marketing practices in developing countries. She is afounding member of the International ManagementDevelopment Association. Her publications includearticles in International Marketing Review,International Journal of Forecasting, Informationand Management, The International Executive andJournal of the Academy of Marketing Science.

My focus in this paper is on the ethicalprinciples which relate to business and which arecontained in the religion of Islam. Islam is gen-erally misunderstood and it is often surprisingto some that it contains an entire socio-economicsystem. In Islam, it is ethics that dominates eco-nomics and not the other way around (Naqvi,1981). My purpose is twofold: (1) to share a per-spective on business ethics, little known in thewest, which may stimulate further thinking anddebate on the relationships between ethics andbusiness, and (2) to provide some knowledge ofIslamic philosophy in order to help managersdoing business in Muslim cultures deal withcultural differences. The paper is organized asfollows. First is a description of the Islamicethical system. Next is a discussion of the dif-ferences between philosophy and practice inIslamic business ethics. This discussion forms thebasis for guidelines on doing business with peoplein Muslim cultures. Egypt is used as an illustra-tive case.

The Islamic ethical system

Muslims derive their ethical system from theteachings of the Quran (which Muslims believeis a book revealed by God to Muhammadin seventh century Arabia), and from thesunnah (the recorded sayings and behavior ofMuhammad). The goals of Islam are not pri-marily materialist. They are based on Islamicconcepts of human well being and good lifewhich stress brotherhood/sisterhood and socio-economic justice and require a balanced satisfac-tion of both the material and spiritual needs ofall humans (Chapra, 1992).

A moral filter

There exists in most societies a relative scarcityof resources with unlimited claims upon them. Afree-market capitalist economy uses market-determined prices as a filtering mechanism todistribute resources. The use of the price systemalone, however, can frustrate the realization ofsocio-economic goals. Under a system of state

control, the allocation of resources is in the handsof a bureaucracy, which is cumbersome and inef-ficient. According to Chapra (1992), the Islamicworldview implies that the market system shouldbe maintained, but that the price mechanism becomplemented with a device that minimizesunnecessary claims on resources. This device isthe moral filter. This means that people wouldpass their potential claims on resources throughthe filter of Islamic values so that many claimswould be eliminated before being expressed inthe marketplace. Resources would not be allowedto be diverted to the production of luxuries untilthe production of necessities was ensured in suf-ficient quantities (Siddiqi, 1981). The definitionof luxurious or extravagant is related to theaverage standards of consumption in a society, theidea being that large departure from the standardswould not be permissible.

Keynes (1972) observations on this subjectmay be useful. He stated that even though theneeds of human beings may seem to be insa-tiable, . . . they fall into two classes thoseneeds which are absolute in the sense that we feelthem whatever the situation of our fellow humanbeings may be, and those which are relative onesin the sense that their satisfaction lifts us aboveor makes us feel superior to others. Needs of thesecond class, which satisfy the desire for superi-ority, may indeed be insatiable; for the higher thegeneral level, the higher still are they. But this isnot so true of the absolute needs. Islamic juristscategories of necessities (daruriyyat), conveniences(hayiyyat) and refinements (tahsiniyyat) would fallinto Keynes first class of needs. These are anygoods and services which fulfill a need or reducea hardship and make a real difference in humanwell-being. Thus comforts are included here(Chapra, 1992). Luxuries (the second class ofneeds), however, are goods and services derivedfor their snob appeal and make no difference toa persons well-being. Galbraith (1958) refers tothis second class of needs as wants.

Consumer advocates in the U.S. have longbeen critical of business practices that increasethe desire for wants and subsequently haveadverse cultural and social effects (Williams,1993). For example, in pursuit of profit maxi-mization, businesses often subject the consumer

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to advertising and sales promotion campaigns thatappeal to the consumers vanity, sex appetite andenvy, either overtly or covertly. Consumers areencouraged to believe that their actualization andsocial esteem are dependent on the frequency andvalue of their purchases. This leads in turn to atremendous amount of wasteful production,with adverse environmental as well as socialimplications. According to the United NationsDevelopment Program (UNDP) Human Devel-opment Report (1994), the lifestyles of the richnations must change; the north has a fifth of theworlds population and four-fifths of its incomeand it consumes seventy percent of the worldsenergy, seventy-five percent of its metals andeighty-five percent of its wood. Even in theserich countries, some of the essential needs of thepoor remain unfulfilled, and high pollution andrapid depletion of non-renewable resourcesoccur.

The question, of course, is how to implementthe moral filter without coercion or despotism.The filter mechanism of values must be socially-agreed upon and some way has to be devised tomotivate consumers and businesspeople to abideby these values. From an Islamic point of view,social change must be gradual and cannot beachieved through force. The Quranic injunctionThere is no compulsion in religion (Quran2:256) is relevant here. Change can occur byinviting people to alter their ways or by settingan example. Historically this is how Islam rapidlyspread through a large part of the world in theseventh and eighth centuries (Eaton, 1994). Forexample, when Muslim merchants traveled todistant lands, the inhabitants of those lands wereimpressed by the traders social and businessconduct and so became curious about theirbeliefs. Many of these inhabitants subsequentlybecame Muslims. A parallel exists today withrespect to the green movement which con-tinues to spread around the globe. The adoptionof environmentally conscious behavior is occur-ring through example, encouragement and edu-cation, as well as by legislation. Indeed, in theenvironmental context, legislation is insufficient.Only when the political will and support of thepopulace are strong enough, are environmentallaws adequately enforced.

The Islamic ethical system contains specificguidelines for achieving the moral filter and forconducting business. These guidelines derivefrom the interrelated concepts of unity, justiceand trusteeship which I explain below.

Unity (tawhid)

The key to the business philosophy of Islam liesin a persons relationship with God, His universeand His people. In common with other revealedreligions is the moral appeal to humans to sur-render themselves to the will of God. Islam goesbeyond this exhortation and teaches that all lifeis essentially a unity because it also provides thepractical way to pattern all facets of human lifein accordance with Gods will. There should beunity of ideas and actions in a persons existenceand consciousness (Asad, 1993). Muslims believethat because people are accountable to God, andtheir success in the hereafter depends on theirperformance in this life on earth, this adds a newdimension to the valuation of things and deedsin this life (Siddiqi, 1981). Islam is simply aprogram of life in accord with the laws ofnature decreed by God. A definite relationshipbetween fellow humans is thus prescribed. Thisis the relationship of brotherhood or sisterhoodand equality (Abu-Sulayman, 1976). In this sense,unity is a coin with two faces: one impliesthat God is the sole creator of the universe andthe other implies that people are equal partnersor that each person is a brother or sister to theother. As far as business is concerned, thismeans cooperation and equality of effort andopportunity.

Justice (adalah)

Islam is absolutely unambiguous in its objectiveof eradicating from society all traces of inequity,injustice, exploitation and oppression. TheQuran also condemns vicarious guilt or meritand teaches the greatest possible individualism. . . no bearer of burdens can bear the burdensof another; . . . man can have nothing but whathe strives for . . . (Quran 53:389). This indi-

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vidualistic outlook on the spiritual destiny ofhumanity is counterbalanced by a rigorous con-ception of society and social collaboration. Intheir acquisition of wealth, however, peopleshould not lie or cheat; they must upholdpromises and fulfill contracts. Usurious dealingsare prohibited. Islam teaches that all wealthshould be productive and people may not stopthe circulation of wealth after they have acquiredit, nor reduce the momentum of circulation(Chapra, 1992).

The intense commitment of Islam to justiceand brotherhood demands that Muslim societytake care of the basic needs of the poor.Individuals are obliged to earn a living and onlywhen this is impossible does the state intervene.The Islamic institution of zakah, that is, a wealthtax comprising compulsory charitable-giving forspecially designated groups in society, facilitatesthe care of all members of society. The rich arenot the real owners of their wealth; they are onlytrustees. They must spend it in accordance withthe terms of the trust, one of the most impor-tant of which is fulfilling the needs of the poor.The word zakah means purification and assuch, income redistribution is not only aneconomic necessity but also a means to spiritualsalvation (. . . of their wealth take alms so thatyou might purify and sanctify. Quran 9:103).Thus, economics is effectively integrated withethics (Naqvi, 1981).

Trusteeship (khilafah)

People are viewed as trustees of the earth onbehalf of God. This does not mean a negationof private property but does have some impor-tant implications. No inhibitions attach toeconomic enterprise and people are encouragedto avail themselves of all opportunities available.There is no conflict between the moral andsocio-economic requirements of life. There is avery wide margin in a persons personal andsocial existence. People may be ascetics or, afterpaying the wealth tax, may enjoy fully theirremaining wealth. Yet, resources are for thebenefit of all and not just a few and everyonemust acquire resources rightfully. Although

material prosperity is desirable, it is not a goalin itself. What is crucial is the motivation, theends of economic activity. Given the rightmotivation, all economic activity assumes thecharacter of worship (Siddiqi, 1982). Indulgencein luxurious living and the desire to show-off iscondemned. Islam does not tolerate conspicuousconsumption (Chapra, 1992).

Resources must also be disposed of in such away as to protect everyones well-being (Al-Faruqi, 1976). No one is authorized to destroyor waste God-given resources. This is veryrelevant to ethics concerning business and theenvironment: when Abu Bakr, the first ruler ofthe Islamic state after Muhammad, sent someoneon a war assignment, he exhorted him not tokill indiscriminately or to destroy vegetation oranimal life, even in war and on enemy territory.Thus there was no question of this being allowedin peacetime or on home territory. Trusteeshipis akin to the concept of sustainable development.Models of sustainable development do not regardnatural resources as a free good, to be plunderedat the free will of any nation, any generation orany individual (UNDP, 1994). The notion oftrusteeship is also common to the Jewish andChristian faiths; Green (1993) refers to Psalms24:1, The earth is the Lords and the fullnessthereof.

The need for balance

Muhammad advised Muslims to be moderate inall their affairs; he described Islam as the middleway. A balance in human endeavors is neces-sary to ensure social well-being and continueddevelopment of human potential. Chapra (1992)notes that Islam recognizes what Marxism soughtto deny: the contribution of individual self-interest through profit and private property toindividual initiative, drive, efficiency and enter-prise. At the same time, Islam condemns the evilsof greed, unscrupulousness and disregard for therights and needs of others, which the secularist,short-term, this-worldly perspective of capitalismsometimes encourages. The individual profitmotive is not the chief propelling force in Islam(Siddiqi, 1981). Social good should guide entre-

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preneurs in their decisions, besides profit. Arelevant saying of Muhammad is work for yourworldly life as if you were going to live forever,but work for the life to come as if you weregoing to die tomorrow.

Islam, like some other religions, places agreater emphasis on duties than on rights. Thewisdom behind this is that if duties (relating tojustice and trusteeship, for example) are fulfilledby everyone, then self-interest is automaticallyheld within bounds and the rights of all areundoubtedly safeguarded. Society is the primaryinstitution in Islam, not the state (Cantori andLowrie, 1992). Chapra (1992) argues that inorder to create an equilibrium between scarceresources and the claims on them in a way thatrealizes both efficiency and equity, it is neces-sary to focus on human beings themselves, ratherthan on the market or the state. As emphasizedby Cantori and Lowrie (1992), the Islamic juristsand the Islamic law or shariah (literally,road) limit governmental power. The shariahis so all encompassing that there is less need forlegislation regarding issues of ethics, socialresponsibility and human interaction. In partic-ular, Muslims believe that the Quran contains afinal and unambiguous statement of the truth,added to what had gone before (for example, themessages delivered to Moses and Jesus). The dutyof the Muslim community is to preserve thismessage. Thus, Muslims have a profound horrorof anything regarded as innovation in matters ofreligion, including what modern Christiansinterpret as necessary adaptations of religion tochanging times (Eaton, 1994).

The emphasis is therefore on the human beingrather than on state power. The real wealth ofsocieties is with their people. An excessive obses-sion with the creation of material wealth canobscure the ultimate objective of enrichinghuman lives. Humans are thus the ends as wellas the means. Unless humans are motivated topursue their self-interest within the constraints ofeconomic well-being (the application of themoral filter), neither the invisible hand ofthe market nor the visible hand of centralplanning can succeed in achieving socio-economic goals (Chapra, 1992).

Summary

It should be emphasized that in Islam, businessactivity is considered to be a socially usefulfunction; Muhammad was involved in trading formuch of his life. Great importance is attached toviews relating to consumption, ownership, goalsof a business enterprise and the code of conductof various business agents. A summary of thekey ethical principles in Islam which relate tobusiness practices is presented in Table I. BecauseJudaism, Christianity and Islam are closelyrelated, many ethical principles such as honesty,trustworthiness and taking care of the lessfortunate, are universal among the three religions,and indeed, among most moral codes. Forexample, as pointed out by Rossauw (1994),someone with a Christian understanding of theunconditional value of life cannot be careless inthe workplace about product and quality stan-dards that pose a threat to the lives of consumersor employees. However, Rossauw suggests that itis not the role of the church to approve orcondemn economic systems. As economicsystems are morally ambiguous, he encouragesChristians to keep a critical distance from theeconomic system in which they are working.In contrast, because Islam supplies a practicallife-program, it is important to note that theIslamic socio-economic system includes detailedcoverage of specific economic variables such asinterest, taxation, circulation of wealth, fairtrading, and consumption. Islamic law (shariah)derived from the Quran and sunnah alsocovers business relationships between buyersand sellers, employers and employees and lendersand borrowers (for full details, see for example,Keller, 1994). Note that there is no differencebetween Muslims and non-Muslims in legalrulings concerning commercial dealings. Forexample, it is unlawful to undercut anothersprice (whether that person be Muslim or non-Muslim) during a stipulated option to cancelperiod. A seller is not permitted to tell thebuyer cancel the deal and Ill sell you onecheaper. Also, whoever knows of a defect in anarticle he/she is selling is obliged to disclose it,to any buyer, Muslim or non-Muslim. BothIslamic and non-Islamic employees must be

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350 Gillian Rice

TABLE IExamples of ethical principles in Islam relating to business practices

Ethical principle Relevant business practice(s)

Unity

No Arab has superiority over any non-Arab and no non- Equal opportunity and non-discriminatoryArab has any superiority over an Arab; no dark person has behavior in hiring, buying and selling.superiority over a white person and no white person has anysuperiority over a dark person. The criterion of honor in thesight of God is righteousness and honest living. Saying of Muhammad (Sallam and Hanafy, 1988).

O mankind! We created from you from a single (pair) of a Teamwork. International business.male and a female, and made you into nations and tribes, that you may know each other . . . (Quran 49:13).

. . . man can have nothing but what he strives for . . . Rewards should be received only after (Quran 53:39). expending efforts.

God likes that when someone does anything, it must be Excellence and quality of work.done perfectly well. Saying of Muhammad (Sallam andHanafy, 1988).

. . . say, O my Lord! increase me in knowledge. Importance of knowledge-seeking, research(Quran 20:114). and development, scientific activity,

training programs, executive training,The acquisition of knowledge is a duty incumbent on every technology transfer.Muslim, male and female. Saying of Muhammad (Sallam andHanafy, 1988).

Trusteeship

God does command you to render back your trusts to those Fulfilling obligations and trust in business to whom they are due . . . (Quran 4:58) relationships and the workplace.

. . . wear your beautiful apparel at every time and place of It is acceptable to have wealth and to prayer: eat and drink: but waste not by excess . . . consume but not to waste resources. (Quran 7:31). Care for the environment.

. . . to God belongs all that is in the heavens and on There is no unlimited right to private earth . . . (Quran 3:129). property.

Justice

. . . God loves not the arrogant, the vainglorious (nor) those Prohibition of hoarding. Encouragement ofwho are niggardly, enjoin niggardliness on others . . . spending, investment in business enterprise(Quran 4:367). and circulation of wealth.

. . . and spend of your substance in the cause of God, and Condemnation of ostentatious consumption.make not your own hands contribute to your destruction; but do good . . . (Quran 2:195).

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Table I (continued)

Ethical principle Relevant business practice(s)

Justice continued. . . .

. . . wealth and children are allurements of the life of this Acquisition of wealth is given reducedworld . . . (Quran 18:46). consideration in the scale of human values.

. . . He has raised you in ranks, some above others: that He Income inequality is permitted.may try you in the gifts that He has given you (Quran 6:165).

. . . it is We (God) who portion out between them their Distinction between managers, workers,livelihood in the life of this world: and We raise some of professionals, etc. is acceptable.them in ranks so that some may command work of others.But the Mercy of your Lord is better than the (wealth) which they amass. (Quran 43:32).

. . . of their wealth take alms, so that you might purify and Income redistribution: wealth should be sanctify . . . (Quran 9:103). shared with those less fortunate.

God permits trade but forbids usurious gain

*. Unlawfulness of loans by which lender(Quran 2:275). obtains benefit.

. . . give just measure and weight, nor withhold from the Give full measure and weight.people the things that are their due . . . (Quran 11:85).

He who cheats is not one of us. Saying of Muhammad Whoever knows of a defect in something is(Keller, 1994). obliged to disclose it.

. . . dont outbid one another in order to raise the price, Fairness in contract negotiation.. . . dont enter into a transaction when others have alreadyentered into that transaction and be as brothers one toanother. Saying of Muhammad (Hanafy and Sallam, 1988).

. . . make your utterance straightforward . . . (Quran 33:70). Truthfulness and directness in negotiation.

On the day of judgment, the honest Muslim merchantwill stand side by side with the martyrs. Saying ofMuhammad (Ali, 1992).

. . . stand out firmly for justice, as witnesses to God, even Non-discriminatory workplace practices.against yourselves, or your parents, or your kin, and whether Protection for whistle-blowers. No it be (against) rich and poor. special privileges for those with wealth or

status.

. . . nor shall We (God) deprive them (of the fruit) of aught Importance of individual responsibility.of their works: (yet) is each individual in pledge for his deeds.(Quran 52:21).

* In the Quran, the Arabic word used is riba which lexically means increment (Keller, 1994).

treated with the same just, equitable and honestapproach.

Note that Islam is not an ascetic religion. Islamallows people to satisfy all their needs and to gobeyond. The objective should not be to createa monotonous uniformity in Muslim society.Simplicity in consumption can be attained inlifestyles alongside creativity and diversity.Neither does Islam mean an absence of economicliberalization. There is a different kind of liber-alization: one in which all private and publicsector economic decisions are first passedthrough the filter of moral values before they aremade subject to the discipline of the market.Undoubtedly, to implement the moral filterin practice requires the dedication of a largenumber of market participants. There is there-fore frequently a wide gap between the philos-ophy and practice of Islamic ethics in countrieswith predominantly Muslim populations. Thenext section examines this issue with referenceto Egypt.

Philosophy and practice: the example ofEgypt

The reality of present-day Muslim life is far fromthe ideal possibilities given in the religious teach-ings of Islam (Asad, 1993). Because of a numberof historical factors, the dominant ideology inMuslim countries is not Islam but rather secu-larism along with a mixture of feudalism, capi-talism and socialism (Chapra, 1992). Islam isconspicuous by its absence, particularly in thepolitical and economic fields. In the Muslimcountries, unjust and oppressive political andsocio-economic systems have been the cause ofthe Islamic resurgence. The socio-economicrestructuring that Islam represents threatens thegovernments short-term (but not necessarilylong-term) interests.

Impact of economic liberalization

For one dimension of life such as business, it isdifficult to differentiate between the impact ofthe religious context of the behavior and the total

cultural system (Moore and Delener, 1986).Egyptians are a religious people closely attachedto their religious culture and identity. There is agrowing awareness among them that manyIslamic cultural traits are being superseded bywestern values, institutions and practices (Najjar,1992; Asad, 1993). Joy and Ross (1989) observehow, today, societal success in the third world ismeasured and evaluated in terms of proximityto the institutions and values of the west.Nevertheless, new techniques, ideas and valueswill be accepted only if they meet the real needsof people more effectively than existing ones.Had such institutions such as liberal democracy,capitalism or socialism succeeded in solving thepressing problems of Egyptian society, theyprobably would not have generated such hostility(Najjar, 1992). Instead, they have been seen asthe cause of rapid deterioration of the quality ofIslamic life and the decline of the Muslim world.The emphasis on conspicuous consumption andchanges in lifestyles which followed Sadatsinfitah (open-door) economic policy and moveto a free market economy in the seventies andeighties aggravated inflation and unemploymentin Egypt, sharpened social disparities andenlarged the class of dispossessed and disaffected.The economic liberalization policy concentratedon trade, the importance of consumer items andexpansion of services such as tourism and hotelmanagement (Tuma, 1988), rather than on indus-trial projects. Privatization efforts continue,although rather slowly because of the govern-ments philosophy of control. A new class hasarisen as a result of the open-door policy.Although it is relatively small, it accumulatedmuch economic and political power during theeighties ( Jabber, 1986). This class consists mainlyof entrepreneurs, professional and high salariedemployees of the private economy.

Cultural dualism

The artificial symbiosis of Islamic ethical beliefsand alien socio-economic philosophies andsystems has led to the emergence of bifurcatedsocieties promoting schizophrenic behavior bothat the individual and collective level (Naqvi,

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1981). Ali (1992) discusses the Arab dual identityin detail, attributing it to two main factors: (1)colonialism which instilled feelings of inferiorityin Arab thought and (2) the artificial division oflands into nation-states. The influx of multina-tional corporations into the region also con-tributed to cultural and social alienation. Becauseof social and political instability in countries likeEgypt, people tend to believe everything in lifeis temporary and they make their way on doubt.

Previous studies (for example, Rawwas et al.,1994; Al-Khatib et al., 1994) suggest that socialand political instability or economic hardshipmay cause tense, pessimistic and struggling indi-viduals to sacrifice ethicality for basic survivalneeds. In particular, Tuma (1988) identifiesthree main features of Egyptian culture whichEgyptians have internalized in their behavior toenable them to deal with the difficulties of lifein Egyptian society. These three features are inde-cision, procrastination and indifference. Peoplewill not firmly answer yes or no to a request,but will say inshaAllah (God willing). They willnot do today what they can do tomorrow, butwill say bukra (tomorrow), as if time had nocost. They accept indecision and procrastinationand their effects with apparent indifference, andsay maalesh (it doesnt matter), even thoughthe costs may be substantial.

If Gods name is invoked in every situation andif every action depends on the will of a higherauthority, Tuma (1988) asks, what role does theindividual play? What responsibility must he orshe carry? It is important to note that Muslimsare exhorted in the Quran never to say that theywill do something the next day without alsosaying inshaAllah. This does not absolve theindividual of responsibility; people should makestrong effort and work hard to achieve theirbusiness plans. If these go awry, in hindsight, aMuslim would consider this to be the will ofGod. This may be viewed as predestination inreverse. Yet there is no concept of predestina-tion in terms of the future as humans have freewill and must make their own conscious life (andbusiness) decisions. As Eaton (1994) explains, theconcept of the divine omniscience would beempty if humans did not acknowledge that Godknows not only all that has ever happened but

also all that will ever happen, and that thefuture is therefore in a certain sense, alreadypast. In the words of the Bible, That whichhath been is now; and that which is to be hathalready been (Ecclesiastes, 3:15). Since humansare subject to time and cannot see the future,they have an experience of free choice. Theymake their choices and act accordingly; onlywhen the act is past can they say it was writtenor it was decreed for us from the beginning oftime (Eaton, 1994). The Quran states that aperson achieves only that for which he makes aneffort: . . . And that man can have nothing butwhat he does (good or bad) . . . (Quran 53:39).

With respect to inshaAllah, there appearsto be a tension between the Qurans teachingand what sometimes occurs in practice. Tuma(1988) suggests that, in practice, the deference toa higher authority may be understood to meanif the boss wills it. If no-one will make deci-sions, then no-one will bear responsibility.Individual initiative is therefore reduced, as alldecisions are centralized, as a way of avoidingresponsibility and blame. Based on this authorsexperiences in Egyptian society, the terminshaAllah is also often used as a way ofmeaning no without actually saying no. It isdifficult to obtain firm commitment frombusiness partners and to plan accordingly.

Al-Khatib et al. (1995) provide the followingexplanation for this type of behavior: one ethicalstandard is used to handle daily decisions whilethe other, influenced by religious teachings, isnot implementable because of the economichardship faced by the people.

Informality in business relationships

Social relations, the traditional extended familystructure and nepotism have a strong influenceon business behavior. Egyptians prefer to dobusiness with people they know and like andwho they consider as friends. They are extremelyhospitable and generous and exchange gifts often.As business relationships are often with friends orfamily, these relationships are characterized byinformality which is subsequently reflected in thetreatment of time, weights and measures, and

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quality control of goods and services (Tuma,1988). Table I includes several Islamic ethicalprinciples which counter this informality. Forexample, there should be no discriminationbetween human beings, whether they are familymembers or not, full measure and full weightshould always be given to buyers, along withexplanation of any deficiencies in products to besold, and hard work and excellence or quality inwork is urged.

Implications for doing business with peoplein Muslim cultures: the case of Egypt

The bifurcated nature of the Egyptian culturecreates some interesting problems for foreignexecutives doing business in Egypt. On the onehand, it might be useful for a foreign executiveto understand and show appreciation for theIslamic concepts of unity (unity of faith andaction, equality of humans), trusteeship andjustice. On the other hand, managers mustconsider the difficult realities of everyday livingwhich lead people to forgo the ethical princi-ples of the Islamic tradition.

Can managers of multinationals play the roleof moral champions as Amine (1996) suggests?About sixty percent of multinationals have codesof ethics in place (The Economist, 1995). Manymanagers ignore ethical diversity, however, andimplement the same code of ethics around theworld. Vasquez-Parraga and Kara (1995) arguethat codes of ethics have not worked. Somecontend that ethics cannot be taught to managersbecause their values are already formed. Thereare, however, numerous documented cases thatshow ethics can be influenced by organizationalpressures (Smith and Quelch, 1992). Rogers etal. (1995) state that, especially in developingcountries like Egypt, managers should developand implement a balanced business philosophywhich integrates the profitability requirements ofmultinationals with the social, economic andecological needs of developing countries andthose who live in them.

For example, the U.K.-based retail outletEgyptian House is a joint venture with EgyptsFoundation for the Productive Families, a gov-

ernment-funded cooperative set up to makeneedy Egyptian families self-sufficient (Thomas,1996a). A non-profit U.S.-based cooperative,Womens Organization Middle East Network(WOMEN), unites women from Egypt, Israel,Jordan and Palestine. Its goals include trainingwomen in management, technology, finance andmarketing techniques, as well as promoting socialservices. Products are to be marketed regionallyand internationally, with the ultimate aim ofdeveloping a franchise system (Thomas, 1995).Niclas, a German clothing retailer is opening alarge number of outlets in the Middle East, withplans to locate production as well as retail outletsin Egypt. It can be argued that Niclas is pro-moting fashion and luxurious clothing items.Nevertheless, the companys plans to promotebrand loyalty also include starting a childrensclub led by eco-friendly character Niclas whowill give talks about nature and ecology. Niclashas a regional partner to assure regional adapta-tion of business approaches (Thomas, 1996b).

There is undoubtedly a need for genuineunderstanding of the ethics of foreigners withwhom an international manager seeks to dobusiness, whether these are other businesspeople,consumers or government representatives. Ineach particular culture, this understanding shouldextend to peoples aspirational ethics as well as totheir everyday practices. Managers should notlook merely at the practices of the most corruptlevel of society (Tuma, 1988; Al-Khatib et al.,1995).

The foregoing discussion of Islamic philosophyand practice in Egypt suggests a number of impli-cations for international executives. These aredetailed in Table II. The Egyptian culture, basedin the Islamic tradition, focuses on social issuessuch as family, health and training for youngpeople. Marketing and public relations effortsmust therefore emphasize these issues (Wilkinson,1996). For example, Egyptian House is planningto sponsor Egyptian students on annual place-ments to learn marketing techniques. In the tele-phone switching market, European firms havestrengthened their position in Egypt by visitingagents more frequently and educating their agentsregarding new technology. Such efforts have ledto closer, more successful business relationships

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Islamic Ethics 355

TABLE IIIllustrations of the business implications of Islamic philosophy and practice in Egypt

Islamic philosophy Egyptian practice Implications for the foreign executive

Unity

Non-discrimination in the Nepotism, importance of social Trust and friendship must be workplace relationships in business developed, often slowly, before

business is possible. Hiring offamily members/friends byEgyptian partner may result in less than qualified individualsfor certain positions.

Importance of knowledge-seeking Egyptians place great emphasis on Provide training as part of contracts;education, wherever possible, technology transfer; visits to foreigngiven the countrys level of companys home facilities mucheconomic development. appreciated.

TrusteeshipCare of the environment Egyptians have neglected this, in Business opportunities in

part because of more pressing environmental technology field.economic problems, but also Marketing appeals could be made because of attitude. Changes are using the Islamic perspective on the occurring. Environmental laws environment.being implemented.

Use of wealth for social causes, The new class which benefited International managers have the to aid less fortunate people. from liberalization tends to engage opportunity to be moral

in conspicuous consumption. champions. E.g. success of Egyptian Yet, there are also efforts on House in UK, a joint venture with the part of some Islamists to Egypts Foundation for the develop social welfare programs. Productive Families (Thomas,

1996a). Also, possibilities for cause-related marketing in Egypt.

JusticePrecision in business dealings, Informality in treatment of time, Foreign executives need to be honesty, full information to the weights and measures, business extremely patient and cautious.buyer, etc. Individual on a handshake. Indecision, Showing strong commitment,responsibility. procrastination. Lack of trust. however, will likely increase the

Efforts to gain benefits from the commitment of the Egyptian state. partner. Need for local agent/

partner.

Prohibition of usurious Some Egyptian businesspeople Need to find out the views of the transactions e.g. payment and observe this ruling; others do Egyptian partner. Foreign executivesreceipt of interest. not. would be wise to avoid expressing

opinions, but should follow desires ofEgyptian partner. Opportunity for innovative financing methods. Islamicfinancing institutions and instrumentsgrowing worldwide with many majorwestern banks involved.

(Middle East Executive Reports, 1995). Innovativefinancing methods based on Islamic practice aregrowing worldwide and are accessible to westernbusiness executives. For example, CitibanksIslamic investment bank is headquartered inBahrain. The Islamic Development Bank has anexport credit agency, The Islamic Corporationfor the Insurance of Investment and ExportCredit (Middle East Economic Digest, 1995).

While there are some differences between phi-losophy and practice, it should be rememberedthat the Islamic worldview has an enduring andstrong influence on Egyptian culture. In commonwith most peoples of the world, Egyptians arevery favorably impressed and honored by a for-eigners genuine desire to learn about the idealto which they aspire. An understanding ofEgyptians inner conflicts in business ethics willbe appreciated. At all times, foreign executivesshould demonstrate respect for Islam and theywill find that, in turn, the Egyptians will trulyrespect the foreigners religious beliefs and ethicalideals.

Conclusion

In response to the need for further research anddiscussion about business ethics in differentcultures, I have described Islamic philosophyregarding business practices. It is important notmerely to understand the philosophy or ideal,however. Knowledge of ethics in practice is vitalto the international manager. The illustration ofEgypt shows considerable diversities betweenphilosophy and practice; diversities which ifunderstood, can provide a foreign executive withideas on how to negotiate with Egyptians andeven what kinds of products or services mightbe appreciated. The specific Egyptian case, ofcourse, has limited generalizability, as all cultureshave unique traits. Nevertheless, the analyticalframework I use is applicable in any culture.Managers should examine first a cultures idealset of ethics, and second, the actual ethicalpractice. They should also attempt to investigatereasons for differences between these two.

Future empirical research could focus on whatare the ethical issues of most concern to Muslim

managers and how these managers deal withissues of social responsibility in their countries.The results would be salient in the developmentand implementation of multinational companiescodes of ethics. In addition, organizations seekingto be good corporate citizens in Muslim coun-tries could benefit from this kind of research.Because much international business is conductedusing agents and various types of joint ventures,it is important to understand the ethical idealsand practices of Muslim business partners. Also,how do they resolve conflicts with non-Muslimpartners? Research should include comparisonsof different Muslim countries, such as those fromNorth Africa, the Gulf region, and SoutheastAsia. Furthermore, what is the impact of Islamicthinking on different business functions such asfinance and marketing? For example, what kindof advertising is not only acceptable in Islamiccultures, but is preferred and more effective? Themost appropriate way to research these issues isby conducting surveys to ascertain the attitudesand practices of managers and consumers inMuslim countries. In some contexts, such asadvertising research, laboratory and field exper-iments may also be feasible.

The Islamic ideal is part of a universal Islamicculture, common to all Muslims around theworld. Hence, a deeper appreciation of Islamcan be advantageous to executives conductingbusiness with any Muslims, from Indonesia toMorocco, and from the former Soviet CentralAsian republics to South Africa.

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