Islam and Corporate Social Responsibility

Hanniah Tariq, in an interesting post on Social Edge, asks, what role cultural differences play with regards to CSR. She writes:

Clearly expectations with respect to business vary from region to region and developing countries in particular provide a socio-economic, religious and cultural context for corporate responsibility, which is in many ways different from developed countries. Hence it is arguable that a different path must be followed for different regions, as distinct drivers exist for them and as throughout the development of the role of responsible business in society, lessons learnt continue to characterize it as a contextual business response to external and internal drivers rather than an absolute model that can be followed and replicated in developing countries.

Moving on to the Islamic world, she asks:

1. whether a different socio-economic, religious and cultural context calls for a different corporate responsibility strategy? 

2. is it prudent and useful for the Islamic world to try and derive principles for CR based on Islamic economic principles?

These questions resonnate with a move towards „culture“ within the development establishment since the late 1990s.

Culture matters …

I am thinking here of the 2000 publication of  Samuel Huntingtons and Lawrence Harrisons Culture Matters: How Values Shape Human Progress. In another such endeavour, in 2005, the German development agency GTZ (Society for Technical Cooperation) and the Goethe Institute, responsible for the dissemination of German culture abroad, initiated a Culture and Development cooperation project, arguing that

experience has shown that a lack of knowledge and comprehension of foreign cultures and values is one of the main reasons why projects and programmes fail. A decisive factor for successful cooperation is … an improvement in the intercultural competence of actors on both sides. Besides knowledge of and respect for the other side’s values and attitudes, this includes developing an awareness of one’s own culture and values.

In order to start this process, the GTZ hosted a number of round table discussions with its partners around the world to discuss the differing meanings of the term „progress“ in the various regions.

Since, Lawrence Harrision has completed an ambitious Culture Matters Research Project (CMRP), seeking to identify “cultural values and attitudes [that are] facilitators of, or obstacles to, progress” so as to develop “value- and attitude-change guidelines … for the promotion of progressive values and attitudes.”

… but how?

While as an anthropologist I certainly agree that culture, understood as the life-style and values of groups of people, does play a role in development (and thus potentially also in CSR practices), the understanding of culture in these discussions is all too often incredibly mechanistic, decontextualisted and a-historic.

Most authors assume that huge groups of people – whole nations, religious communities, ethnic groups – share the same practices and values. This assumption lacks any empirical basis – instead what can be shown is that even in small villages we find a heterogenic mix of voices and practices and that with the global circulation of goods, ideas and people, lifestyles everywhere are becoming more mixed and differentiated.

Very often our ideas about „a culture“ are shaped by the interests of elites, who manage to speak for a supposedly homogenous group. In order to gain a public voice and political or economic power, they very often simply ignore the realities on the ground.

Islamic Economics

I am thinking here, for example, about Islamic economics, viewed by many as a traditional, religiously rooted alternative to Western capitalism.

Yet according to scholars such as Duke University economist Timur Kuran, who wrote Islam and Mammon, Islamic economics does not go back to Muhammad but is an “invented tradition” that emerged in the 1940s in India. The notion of an economics discipline “that is distinctly and self-consciously Islamic is very new.” Even the most learned Muslims a century ago would have been dumbfounded by the term “Islamic economics.”

In an interview Kuran stated that:

the doctrine of Islamic economics is simplistic, incoherent and largely irrelevant to present economic challenges. Few Muslims take it seriously, and its practical applications have had no discernible effects on efficiency, growth or poverty reduction. You might wonder, if this is so, why Islamic economics has enjoyed any appeal at all. The real purpose of Islamic economics has not been economic improvement but cultivation of a distinct Islamic identity to resist cultural globalization. It has served the cause of global Islamism, known also as “Islamic fundamentalism,” by fueling the illusion that Muslim societies have lived, or can live, by distinct economic rules. In fact, now as in the past, the economic life of Muslims has adhered to the very same principles observed elsewhere. 

The official claims behind islamic banking is that it has abolished interest on money and achieved economic equality. Now Kuran challenges both ideas. According to him, complex profit-loss sharing techniques such as ijaramudarabamurabaha, and musharaka are all loopholes, providing thinly disguised payments of interest. Islamic banks “look more like other modern financial institutions than like anything in Islam’s heritage.” (The loopholes are explained in some detail here).

A dynamic view of culture

There are different approaches, which include the role culture plays in development in a much more sophisticated and realistic way. If I were to recommend one volume it would be Culture and Public Action, the outcome of a 2002 World Bank conference organised by Vijayendra Rao and Michael Walton. The authors (among them Amartya Sen and Arjun Appadurai) take local views on development and real-life interaction between development workers and local social scenes into account. They view culture not as a constant but as a processual variable, not separate from the structural conditions of class and gender and the ideological conditions of politics but interconnected with them. Their culturally informed lens focuses as much on the culture of the local society “to be developed” as on the unequal relations between them and governments, nongovernmental organizations, or external donors, whose actions are as much guided by cultural beliefs and practices as those of their target societies

Thus an understanding of CSR practices within predominantely Islamic societies will similarly have to include an understanding of the various global and local forces shaping all contemporary societies. And not start out with some notion of an „Islamic Civilization“ or „a Islamic culture“. There is no such thing.  


2 Responses to “Islam and Corporate Social Responsibility”

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