Qualitative Aspects of Business Transactions: An Islamic Perspective

Mufti Abdulkadir Barkatulla
Senior Imam Finchley Mosque, London. Sharia Advisor to Banks

Part 1

An Abstract:

In today’s fast turnaround business world, the qualitative aspects of transactions are given less priority. The manufacturing world is all too familiar with quality control of production and assembly lines. In the service sector of distribution, marketing and customer satisfaction, it is often overlooked and forgone, with unpleasant consequences. It is not just medium size enterprises with short-term revenue maximizing objectives - ignoring the importance of the quality aspect - but even the large corporate world is culpable. Collapse of corporate giants and stock bubble bursts’ are only a few examples.

Islamic Sharia not only provides manifest governance rules and guidelines for businesses, it also provides philosophical rational for good practices and long term prosperity. The modern day concept of CRM (Customer Relationship Management) is often perceived as a technical IT challenge. But CRM is primarily a strategic business philosophy and process issue rather than a technical issue.

Islamic concepts such as baraka (growth), samaha (generosity), nihla (happy heart giving), and ishraf (greed) are a few examples of an overall business philosophy. Inner intentions and emotional aspects of business entities are taken into account for profitability of transaction and success of overall business enterprise. Here Sharia is not only concerned with compliance to the letter of the law but spirit and philosophy of the system as well. Adherence ensures the long term prosperity and well-being of transacting parties going beyond lifespan of individuals and to future generations.

Introduction

Quality or quantity has always been contentious notion. In today’s business environment practical considerations take centre stage instead of philosophical rational. Islamic perspective is crystal clear: “God loves that when you do something, accomplish it to the perfection” as attention is drawn in the Qur’an to the level of perfection in the natural creation.

Sharia compliance business and financial services sector has come a long way in the last three decades in various parts of the world. It is growing both in volume and complexity at a steady rate. Research and development is intensifying into devising evermore Sharia compliance products and services.

We are well placed now to pay attention to the qualitative aspects of both providers and consumers of Sharia compliance services. Compliance is not only required at product inception, design and marketing, but the whole process of delivery, execution and conclusion, and maturity of transactions. Quality Assurance covers all activities from design, development, production, servicing and documentation. As it is observed in the following sections, not only actions are subject of compliance, but motivations and intent.

Business Process re-engineering

Notwithstanding classic and modern theories of general equilibrium, corporate world is indeed going through process of re-engineering business models and processes. Corporate social responsibility and ethical guidelines for corporate governance are steps in positive directions. CRM, Customer Relationship Management is strategic business philosophy and processes are rooted in Sharia. CCRM, Collaborative Customer Relationship Management, is equated to PRM or “Partner Relationship Management”.

Moreover, treatment of suppliers as partners or customers, and a range of approaches to accounting, marketing, public relations, operations, training, labor relations, and investment are steps to improve qualitative business atmosphere. Attempt is made to realize Islamic business ethics and rational underlying Sharia Compliance in letter and spirit.

Islamic Business Ethics and Ethos

The ethical foundations of Islamic businesses are:

Fairness and balance in exchange transactions
Transparency and clarity of terms of exchange
Mutuality of individual and social usefulness
Social and contractual justice
Realism and actual relations

Sharia Compliance

The very objective of Sharia is to promote the welfare of the people, which lies in safeguarding their life, their intellect, their faith, their posterity and their wealth. In other words whatever promotes physical security, physical and mental health, protection of wealth and property, freedom of belief, socio-economic justice, balanced satisfaction of both material and spiritual needs of all human beings is in line with Islamic Sharia. Thus all useful economic activity is lawful and encouraged except transactions involving:

1. Unfairness towards any person, entity, and environment (zarar)
2. Riba (interest, usury and commodity riba)
3. Maysir (uncertain and speculative transactions)
4. Gharar (Ambiguity, excessive risk)
5. Trade in sinful activities i.e. goods and service declared unlawful
6. No underlying physical assets

Apart from halal and haram, Qur’an describes all satisfactory business exchange of goods and services by entities as trazi thus lawful and all unlawful exchanges as batil and bakhs.