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Tuesday, 24 January 2017

Socially responsible entrepreneurship

Source: The Star (Malaysia)
Muhammad Hisyam Mohamad
Date: 24 January 2017

Trade and business have a special position in Islam as a way of earning a living, but they should not have any adverse effect on the interest and well-being of other stakeholders.
Seeking lawful sustenance for one’s livelihood is a religious duty for Muslims, enjoined by Islam.
Islam also suggests the best approach Muslims could undertake in their economic pursuits – an approach that not only serves an avenue to earn halal income, but also has a positive impact on the community’s well-being, from local neighbourhoods to regional locales.
The best way to earn halal income, according to Islam, is through trade and business activities.
Even though the concept of entrepreneurship is not mentioned in the Quran per se, buying and selling (bay’) as well as trade (tijarah) both are. Both concepts are interrelated, to the extent that they are interdependent on one another.
Any business transaction involves an exchange of goods or merchandise for something else of value, such as money.
Thus, if a businessman cannot produce goods on his own, he may require others – in this case, an entrepreneur – to supply them. Without entrepreneurial activities, the supply of goods could be a problem for the business community.
Similarly, an entrepreneur is in need of a businessman to sell the products and goods he produces. Otherwise, he would need to assume both the roles of an entrepreneur and a businessman at the same time, which could result in inefficiencies and impact his productivity negatively.
Therefore, when the Quran and the prophetic tradition mention trade or commerce, we can infer that both also refer to entrepreneurship. Furthermore, the primary motivation of entrepreneurs is to produce products and goods that are then sold or traded to generate returns or income.
A number of hadiths of Prophet Muhammad and Quranic verses signify the advantages of entrepreneurship and business activities.
Among them is the saying of the Prophet quoted by al-Ghazali is his work Ihyaa ‘Ulumuddin (Revival of Religious Sciences): “Take to trade and commerce because nine-tenths of the source of earnings is in trade and commerce”.
In another hadith, the Prophet was reported to have said, “The truthful, trustworthy merchant (on the Day of Judgment) is with the Prophets, the truthful and martyrs.”
While in the Quran, Surah al-Saf, verse 10-11, Allah Almighty says:
“O you who believe! Shall I show you a commerce that will save you from a painful doom? You should believe in Allah and His messenger, and should strive for the cause of Allah with your wealth and your lives. That is better for you, if you did but know”.
In the verse, Allah Almighty uses the word tijarah or “trade” to illustrate the advantages that await those who believe and unconditionally sacrifice their wealth and lives in His path. It is commonly accepted that the primary incentive that drives people to embark on business ventures is to make profit.
As such, if business or trade activities did not have any advantage over other livelihood alternatives, Allah would not have used the word to metaphorically equate its attributes i.e. trading goods and services for profits vis-a-vis wholeheartedly submitting to His Will and sacrificing their wealth and souls to seek protection from His grievous punishment in the Hereafter.
In addition, the central figure of Islam, the Prophet Muhammad, was also an entrepreneur and actually came from a family involved in the field.
Likewise were the companions of the Prophet such as Abu Bakr, Uthman ibn Affan and Abdul Rahman ibn Awf who were successful and generous entrepreneurs and who greatly contributed to the development of Islam.
Clearly, this indicates that entrepreneurship as a livelihood option is highly regarded or has a rather special position in Islam.
The argument is further strengthened by the fact that there are various concepts related to business contracts and business governance that one can find under the umbrella of the fiqh muamalat discipline (the jurisprudence of commerce).
These concepts include mutual agreement between contracting parties (normally investors and entrepreneurs) under the contract of mudarabah (investor partnership) or musyarakah (joint venture) or istisna’ (building payment scheme).
Those relating to governance are more focused on business ethics that guide entrepreneurs and employers on how to deal with customers, suppliers, competitors, employees, the environment and stakeholders.
In general, entrepreneurship is highly valued by Islam, for it is considered a major driver of economic growth and development. However, despite its positive effect on the economic well-being of the nation, entrepreneurship is not above criticism.
One of them is associated with the negative externalities of entrepreneurship, which eventually contributes to environmental degradation and climate change.
The root cause of the problem is the outright greed of individual entrepreneurs who are incentivised by a secular economic worldview that gives total freedom to them in their pursuit to maximise profits.
Islamic economic philosophy on the other hand brought a different message than the capitalist worldview used to.
In Surah al-Qasas, verse 77, Allah Almighty says to the effect: “And seek by means of what Allah has given you, your future Abode, and (yet) do not neglect your portion of this world, and do good (to others) as Allah has done good to you, and do not seek to make mischief in the land; surely Allah does not love the mischief-makers.”
The above verse is generally sufficient to serve as a guide to Muslims, that they should stand on their own feet to earn their livelihood.
This also means that they should abstain from begging or asking others for sustenance or support. More interestingly, Allah enjoins man to do good deeds. He has also forewarned man of misbehaviour which could cause harm to humanity and the planet. In other words, while engaging in economic pursuits for his survival, man should abide by all Islamic values which essentially direct people towards enjoining good (‘amr al-ma’ruf) and forbidding evil (nahy al-munkar).
Any negative externalities (mafsadah) that may arise from activities undertaken should be kept away at all times and at all costs.
Therefore, Muslim entrepreneurs while pursuing their individual interest must emphasise production of useful goods and services. They must ensure that all economic activities carried out do not cause any adverse effect on the interest and well-being of other stakeholders.
This unique philosophical basis is attributable to the far-reaching and comprehensive scope of the Islamic worldview itself which concerns not only the relationship between man and Allah, but also man with his fellow men, and man with other creatures of the universe.
In essence, this is to be understood from the outset by those who want to enter into the world of entrepreneurship.
Muhammad Hisyam Mohamad is Fellow at the Centre for Economics and Social Studies, Institute of Islamic Understanding Malaysia (IKIM). The views expressed here are entirely the writer’s own.
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