Assignment

Business Ethics & Islam – MBA 2020

Submitted to: Kamran Rashid

Submitted By: 20010065
May 25, 2019
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Executive Summary
Business ethics refers to the system of moral and ethical beliefs that directs the conduct,
behaviours and decisions of individuals and entire organizations. In today’s world, business has
established itself as a dominant socioeconomic political institution with a strong influence on the
society. For this reason, the society expects the business leaders to shoulder the responsibility for
maintaining their welfare and if an organization fails to live upon the expectations of the society,
it not only loses its market share, but also its respect and reputation.
Unfortunately, malpractices at organisations have been on a rise in the recent times, reason being
the myopic pursuit of business executives towards profit maximization. Enron, WorldCom,
Lehman Brothers, and Axact are some of the examples of companies that were finally caught and
hence penalised for their shoddy business practices in the recent years. Hence a definite mission
and a corporate code of ethics, which binds the boards, managers and employees to act ethically
under any situation is crucial. Both religion and culture influence the behaviour of individuals in
an organization and can play an important role in shaping the ethical values of that organization.
Being business students and the citizens of Islamic Republic of Pakistan, it is therefore
incumbent upon us to understand the Islamic framework of ethics and how it can be used in our
customary business doings.
It is, therefore, the objective of this document to provide a general idea about the framework that
Islam uses to answer an ethical inquiry related to business, to critically evaluate the nature of
business related ethical inquiries in other major religions like Judaism, Christianity, and
Hinduism by looking at the frameworks developed in each of these religions to handle such
inquiries and, finally, to assess these frameworks by comparing them to the one proposed by
Islam.

Need for an Ethical Business Framework

Business today has emerged among the dominant socioeconomic institutions. Increasing
globalization and a struggle among the businesses for profit maximization has resulted in a
number of wrong practices taking place at these organizations. Under such situation, the need for
business ethics is stronger than ever before. Although governments around the world have
developed legal frameworks to ensure that the businesses operate fairly, however, there is a
strong need for a code of ethics that should be followed by the businessmen around the world.
Business practices are also influenced by the religion and hence there is a need to communicate

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the business ethics that are taught by various religions to the business professionals as well as the
employees. Awareness of these ethics will guide the people and anyone who is a believer of the
divine law of God and the life hereafter will then be watchful of his actions and hence might act
more ethically in his business dealings.
Secondly, the global business environment today is more diverse and interconnected than ever
before. More and more organizations are striving to expand their global reach, and there are
many challenges that the business professionals have to face because of this increased diversity.
Business practices in an organization are effected by the culture and religion of the region it
operates in. So, one must be equipped with the knowledge about the ethical teachings of the
religion in order to successfully deal with the intercultural affairs when doing business around
the world.
An overview of the different frameworks of ethics developed by the major religions of the world
is given as follows:

Framework for Business Ethics in Islam

Islamic Law
Islam is one of the three Monotheistic religions. Law is integral to Islam and it possesses a law
called “Shari’a” which is unique and distinct in itself, with “divine guidance” as its main theme4.
But unlike the man-made law, Shari’a constitutes an entire way of life. It is much broader than
the law and entails morality, law and ethics. Therefore, the Islamic ethical values deal with all
walks of human life. It gives directions in social, marital, economic or political life, governance,
war and peace as well as internal and external affairs. With regard to the business dealings, Islam
has given clear guidelines for it as well. Islam promotes fair and transparent business and has
declared some of the businesses unlawful because of their damaging effects on the society. But
to learn about the business ethics that have been developed by the Shari’a, it is very important to
have an idea of the framework that Islam uses to deal with all kinds of issues related to business.
Sources of Shari’a
The Islamic framework of ethics is mainly derived from the following four sources (Exhibit 1):
1. Quran: The Qur’an is the final revelation of Allah, that is, the literal word of Allah, and was
revealed to the Prophet (Sallallahu Alayhi Wa Sallam), in the form of Wahi, gradually, over 23
years. The purpose of its message is to establish the oneness of Allah and to lay down a way of
life which regulates man’s relationship with others and God.

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Because of its inimitable style and eloquence, and, above all, the guidance and moral directives it
comes with, it ensures the worldly and next-worldly welfare of humanity.
ِ ‫إِنَّ َٰ َهذَا ا ْلقُ ْرآنَ يَ ْهدِي ِللَّتِي ِه َي أ َ ْق َو ُم َويُبَش ُِر ا ْل ُمؤْ ِمنِينَ الَّ ِذينَ يَ ْع َملُونَ الصَّا ِلحَا‬
‫ت أَنَّ لَ ُه ْْ أَْْ ارا ََبِ ا‬
17:9 - ‫يرا‬

“Indeed, this Qur'an guides to that which is most suitable and gives good
tidings to the believers who do righteous deeds that they will have a great
reward.”

The Arabic word Qur’an is derived from the root ‘qara’a’, which means “to read” or “to recite”.
Since Quran is the word of Allah which was transmitted as Wahi-e-Matlu i-e Allah transmitted it
in His own words and speech to the Holy Prophet (Sallallahu Alayhi Wa Sallam), and it is
necessary that that these revealed words should be transmitted and hence recited by the people in
the same accent, expression and pronunciation as they were revealed.
For this reason, the Qur’an was written and preserved during the life of Muhammad, as there is
enough evidence of the Prophet’s dictation of Quran to his scribes immediately after the
revelation and proofreading it4. Moreover, since Allah is the sole Author of Quran, He alone has
the right to arrange the material within His Book. As Allah entrusted the Holy Prophet as His
viceroy on earth, even the arrangement of the verses within the Surahs was done during the life
of Muhammad (Sallallahu Alayhi Wa Sallam)4.
However, the compilation of the Quran started soon after the death of Muhammad (Sallallahu
Alayhi Wa Sallam), once again, the compilation was done very carefully and a verse was added
to the compiled version only when multiple sources were validating it (Tawatar). It is because of
this process of codification, that the authenticity of Quran has never been questioned by any
Muslim scholar or institution.
Since Shari’a is derived from the verses from the Quran, belief in the Qur’an’s direct,
uncorrupted divine origin is fundamental to Islam, which further entails the believe that the
Qur’an has neither errors nor inconsistencies.

َٰ
2:2 - َ‫ب ۛ فِي ِه ۛ ُهداى ِل ْل ُمت َّ ِقين‬ ُ َ‫ذَ ِلكَ ا ْل ِكت‬
َ ‫اب ََل َر ْي‬

“This is the Book about which there is no doubt, a guidance for those
conscious of Allah”

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2. Sunnah: Sunnah can basically be classified as “Wahi-e-Gher Matlu”, which is the revelation
that Allah projected in the heart of the Holy Prophet. These are not the words of God, but the
Holy Prophet (PBUH) communicated these revelations to the people in his own words and
through his deeds. Based on this definition, Sunnah involves all the Prophet’s sayings, deeds, his
silent approval of behaviour of his companions and the description of his personality.
Sunnah, hence, is second source of Islamic law. The Quran being the word of Allah provides a
broad directive about major issues and often deals with subjects in brief terms, leaving details to
be explained by Holy Prophet. The authority of Sunnah as the source of law has itself been
established in the Quran. The Quran says:

‫َّللاَ ََ ِث ا‬
33:21 - ‫يرا‬ َّ ‫سنَةٌ ِل َمن ََانَ َي ْر ُْو‬
َّ ‫َّللاَ َوا ْل َي ْو َم ْاْل ِخ َر َوذََ ََر‬ ْ ُ ‫َّللاِ أ‬
َ ‫س َوةٌ َح‬ ُ ‫لَّقَ ْد ََانَ لَ ُك ْْ ِفي َر‬
َّ ‫سو ِل‬

“There has certainly been for you in the Messenger of Allah an excellent
pattern for anyone whose hope is in Allah and the Last Day and [who]
remembers Allah often”

During his life time, Muhammad (Sallallahu Alayhi Wa Sallam) had instructed his followers not
to write down his acts, to avoid confusing it with the Qur'an4. However, his followers used to
propagate his sayings among the people. While the Prophet was alive, any doubts people had in
mind regarding any issue could be directly asked from him, even after his death people who were
close to the prophet were good source of information regarding the sayings and conduct of the
prophet, but later on as the confusion started arousing, there was a need to codify the Hadith as
well. This process of codification was done very scientifically, where the authenticity of a hadith
was checked over six aspects (Exhibit 3) and were then classified accordingly (Exhibit 4). This
scientific process therefore ensured that the hadith that we know today are reasonably sound and
we can seek guidance from them. The six books of hadith that were compiled by the two
generations of authors are usually consulted for formulation of law in Islam.
3. Ijma (Consensus): Ijma means the unanimous view of the jurists on a particular issue. It is
applicable only where Quran and Hadith have not clarified a certain aspect of law. The
authenticity of Ijma as a source of Islamic law is established by the Prophet (Sallallahu Alayhi
Wa Sallam) himself:

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“Whatever the Muslims hold to be good before Allah. It is incumbent upon you
to follow the most numerous body. Whoever separates himself from the main
body will go to hell. If you yourselves do not know then question those who
do.”

At another instance, the Prophet (Sallallahu Alayhi Wa Sallam) said:

“Muslim (majority or main body) will never agree on a wrong matter”

Ijma therefore is an important source of law, and once the consensus is made, it is binding and
cannot be negated by the Muslim Ummah.
4. Qiyas (Analogy): Qiyas, which is basically reasoning by analogy, is the fourth important
source of Islamic law5. It is the process of deductive reasoning according to which the jurists,
when confronted with an unprecedented situation, base their argument on logic used in Quran
and Sunnah. Qiyas helps to find the right course of action during the modern times. It, however,
is not binding.
Legal Rulings - Ahkam
In Islam, Shari’a regulates all human actions. The Islamic law therefore, uses all the above
mentioned sources to define the right course of action to be followed by the people under
different situations, and classifies various actions as either right or wrong. Hence Shari’a puts all
our actions into five categories namely Fard (obligatory), recommended (Mustahabb),
neutral/permissible (Mubah), disliked (Makruh) or forbidden (Haram)4 (Exhibit 2).
Fard actions are obligatory and must be performed. Such actions are rewarded when performed
with good intentions. The opposite is true in case of Haram, anyone who avoids and refrains
from Haram acts is rewarded and praised. Recommended action is that which should be done,
and the doer gets a reward. Its opposite is the Makruh, so anyone who performs makruh acts is
not punished, but the one who gives it up is rewarded and praised. Permissible or neutral action
is the one which is neither encouraged nor discouraged.
It is through these Ahkams that Islam is able to regulate the actions of its followers. By declaring
certain actions, that can be harmful for the individuals or the society as Haram or Makruh, Islam
ensures that the practicing Muslims stay away from such habits and focus on the right and
recommended actions that improve the overall status of the society and reward the individual for
his efforts in the life hereafter.

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Business Ethics in Islam

Islam strongly encourages trade and business, which is evident from the fact that the Prophet
Muhammad (Sallallahu Alayhi Wa Sallam) himself was a trader. Moreover, Islam has made it
obligatory to support oneself and those one is responsible for, and has placed laws to regulate the
commerce and transactions between people. Moreover, Islam has laws to ensure fair dealing,
economic justice, and to avoid exploitation and dispute in the business dealings.
The foundation of Islamic business ethics requires an understanding of the purpose of human
life. This earth and its surrounding atmosphere have the resources to sustain our lives on it, and
Allah wants us to put in our efforts to gain a livelihood.

“And that man shall have nothing but whatever he strives for.” (53:39)

This is also evident from the verses of Surah Al-Baqarah where Almighty God sent Adam and
Eve as well as the Satan down to the earth and declared:

ٍ ‫ع ِإلَ َٰى ِح‬

2:36 - ‫ين‬ ٌ ‫ست َقَ ٌّر َو َمتَا‬ ِ ‫عد ٌُّو ۖ َولَ ُك ْْ ِفي ْاْل َ ْر‬
ْ ‫ض ُم‬ َ ‫ض‬ ُ ‫َوقُ ْل َنا ا ْه ِب‬
ُ ‫طوا َب ْع‬
ٍ ‫ض ُك ْْ ِل َب ْع‬

And We said, "Go down, [all of you], as enemies to one another, and you will
have upon the earth a place of settlement and provision for a time."

Justice and fairness is stressed upon in Islam:

‫علَ َٰى أ َ ََّل ت َ ْع ِدلُوا ۚ ا ْع ِدلُوا ه َُو‬

َ ‫شنَآنُ قَ ْو ٍم‬ ْ ‫ش َهدَا َء ِبا ْل ِق‬
َ ْْ ‫س ِط ۖ َو ََل يَجْ ِر َمنَّ ُك‬ ِ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا َُونُوا قَ َّو‬
ُ ِ‫امينَ ِ َّّلِل‬
5:8 - َ‫ير ِب َما ت َ ْع َملُون‬ ٌ ‫َّللاَ َخ ِب‬ َّ ‫ب ِللتَّ ْق َو َٰى ۖ َواتَّقُوا‬
َّ َّ‫َّللاَ ۚ ِإن‬ ُ ‫أ َ ْق َر‬

O you who have believed, be persistently standing firm for Allah, witnesses in
justice, and do not let the hatred of a people prevent you from being just. Be
just; that is nearer to righteousness. And fear Allah; indeed, Allah is
acquainted with what you do.

Moreover, Islam teaches us to be moderate in our lives and in the use of natural resources:

5:87 - َ‫ب ا ْل ُم ْعت َ ِدين‬ َّ ‫ت َما أ َ َح َّل‬

َّ َّ‫َّللاُ لَ ُك ْْ َو ََل تَ ْعتَدُوا ۚ ِإن‬
ُّ ‫َّللاَ ََل يُ ِح‬ ِ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا ََل تُح َِر ُموا َط ِيبَا‬

O you who have believed, do not prohibit the good things which Allah has
made lawful to you and do not transgress. Indeed, Allah does not like
transgressors.

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Like any other aspect of human life, Islam also governs the rules of economics. It gives clear
commands to be followed for a balanced and sustainable economy and holds people questionable
for the way they earn the wealth and where they spend it.
The ultimate worth of actions is based on intention and sincerity, as mentioned by the Prophet
(Sallallahu Alayhi Wa Sallam), who said:

“Surely, all actions are but driven by intentions, and verily every man shall
have but that which he intended.”

Islam protects the rights of the consumers and suppliers. It puts great emphasis on the sanctity of
property and doesn’t allow anyone to take someone else’s property without his consent.

‫اض ِمن ُك ْْ ۚ َو ََل تَ ْقتُلُوا‬

ٍ ‫َارةا عَن ت َ َر‬ ِ َ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا ََل تَأ ْ َُلُوا أ َ ْم َوالَكُْ بَ ْينَكُْ بِا ْلب‬
َ ‫اط ِل إِ ََّل أَن تَكُونَ تِج‬
4:29 - ‫َّللاَ ََانَ ِب ُك ْْ َر ِحي اما‬ َ ُ‫أَنف‬
َّ َّ‫س ُك ْْ ۚ إِن‬

O you who have believed, do not consume one another's wealth unjustly but
only [in lawful] business by mutual consent. And do not kill yourselves [or one
another]. Indeed, Allah is to you ever Merciful.

There are laws for partnership including details about the rights of the partners, there share in the
profit and loss, responsibilities of the partners etc. Islam has also provided with detailed laws
regarding the rights of the buyers and the sellers and ensures just and fair dealings.

“Give full measure and weight with justice.”(6:152)

Islamic teachings also emphasize that a worker should be paid on time and that a fix wage should
be settled between the employee and the employer to avoid the exploitation of the employee.
Finally, Islam discourages the exploitation of the poor and for this purpose it has declared
interest on loans as Haram, while at the same time declaring lending as “Qarz-e-Hasna” for
which the lender will be rewarded by Allah.
In short, Islamic ethical values (Shari’a) are derived from the Qur’an and the Sunnah and do not
apparently serve the materialistic pursuits. Rather, their purpose is much wider and more
rewarding. Islam places a great deal of emphasizes on the well-being of the human beings
through socio-economic justice. It doesn’t discourage the pursuit for the worldly gains, but rather
stresses a balance between the material and spiritual needs. Instead of profit maximization that is

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considered to be the aim of modern day organizations, Islam expects the business to function
strictly in accordance with the rules laid down by the religion with the aim of maximizing the
‘social and moral values’ instead of ‘profits’.

Framework for Business Ethics in Judaism

Jewish Law - Halakha
Judaism is the oldest of the three principal monotheisms. The Jewish Law is called “Halakha” 6,
which contains the rules and practices that affects every aspect of life.
Sources of Halakha
The Jewish law is derived from the following the following three sources:
1. Torah: The primary source of Halakha is the written Torah (the five books of the Moses),
which includes the unchangeable “613 mitzvot” (commandments) that God gave to the Jewish
people in the Torah.
Apart from the written Torah, Oral Torah, which represents those laws, statutes, and legal
interpretations that were not recorded in the Five Books of Moses is also considered to be a
source of Jewish Law. Oral Torah has also been compiled, one of the source of oral Torah is
Mishnah, compiled between 200–220 CE by Rabbi Yehudah haNasi, and the other compilation
is called Gemara, which includes a series of running commentaries and debates concerning the
Mishnah. Together they form the Talmud, which is the dominant text of Rabbinic Judaism6.
2 Rabbis: Apart from the laws that come directly from Torah, Halakha includes laws that were
enacted by the rabbis.
3 Minhag (Customs): Another source of Hilakha is Minhag, which refers to a custom that were
developed for worthy religious reasons and has continued long enough to become a binding
religious practice. It is also been used in a looser sense, to indicate a community or an
individual's customary way of doing some religious thing6.
Because of the lack of a single judicial hierarchy or a proper review process for Halakha, the
controversies related to the authenticity of Halakha have never been settled. Because of this
reason, despite the fact that all these three sources are considered to be binding, today most of
the Jews view the Halakha as less binding in their day-to-day life.
Moreover, the Sanhedrin which functioned as the Supreme Court and legislature for Judaism in
the ancient times, ceased to function in its full mode with the end of patriarchate in 425 AD8.

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Today, even the local rabbis and local rabbinical courts control the authoritative application of
Jewish law, but the application of such decisions is applicable only locally. A similar case can be
found in the branches of Judaism that follow Halakha, where, layman can make various ad-hoc
decisions, but because they aren’t experts, they don’t have the authority to decide certain issues
definitively.
Business Ethics in Judaism
The Jewish Law act as a guiding principle for the Jews in every aspect of their life, therefore
Judaism puts great deal of emphasis on ethics in a business environment. It is evident from the
fact that in the Torah, there are over 100 Mitzvot concerning the fitness of one's money11.
Jewish law and ethics stresses on the need to be accurate in weights and measures, as is
mentioned in book of Vayikra:

“You shall not falsify measures of length, weight, or capacity. You shall have
an honest balance, an honest weight, an honest ephah, and an honest
hin”(19:35-36)

Just like Islam, Judaism also discourages monetary deception, as is mentioned in Vayikra:

“When you sell anything to your neighbor or buy anything from your
neighbor, you shall not deceive one another” (25:14)

Other ethical teachings for conducting business in Judaism that are similar to Islam involves
discouraging overcharging, verbal deception and false packaging or labelling12.
Another teaching related to business ethics in Judaism is called “putting a stumbling block before
the blind”, which necessary means that one should refrain from deceiving the buyer by selling
ones faulty item. This is mentioned in Vayikra Chapter 19 (v. 14):

You shall not curse the deaf nor put a stumbling block before the blind, but you
shall fear your God, I am the Lord”.

Similar to Islam, which has a system of Zakat, Judaism also requires its statesmen and businesses
to pay tax for the welfare of the entire community.
Apart from these principles, Judaism also discourages wasting time at the workplace or
whistleblowing and has the principle of “above suspicion”, which dictates that those in a position
of trust must be above suspicion and demands transparency from them. This principle can be

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helpful to avoid unethical practices that appear because of lack of transparency by the managers
and accountants.

Framework for Business Ethics in Christianity

Christian Law
Christianity is one of the three monotheistic religions. Christianity was developed in Judea in the
mid-first century CE, It was initially based on the teachings of Jesus and later on the writings and
missionary work of Paul of Tarsus. Unlike Judaism and Islam which were more autonomous
where revealed law holds a central place, Christianity does not possess a body of revealed law
and since it was founded by the Jews, who, despite their willingness to enter into an
eschatological partnership with the gentiles, still saw themselves as Jews, the Christian Law is
completely influenced by the Law of Moses. Even the “new commandants” mentioned in the
New Testament are derived from the renewal traditions of Judaism. Moreover, Christianity
existed without a law or policy of its own for three centuries and it was only during the fourth
century that Christianity prevailed politically and took over the law of Rome. Thus there was no
distinctive Christian law, but only the Roman law which became the foundation of Christian
World. Even during the Middle Ages canon law developed side by side with the civil law, but
the Christianity was still influenced by the Roman law and was thus limited to a certain region
unlike Islam whose subject is the entire human kind.
In today’s word, Christian Law, commonly referred to as Canon law, refers to a set of ordinances
and regulations made by the church leadership, for the government of a Christian organization or
church and its members.
Sources of Canon Law
Although there are diverse approaches to developing the framework for Christian ethics, in
general, all these approaches have in them the following sources as common:
 The main source of Christian Law is derived from the teachings of Jesus of Nazareth
(Christ) and the Apostles contained in the Christian Bible (Old and New Testaments)
 The other source include the living Christian tradition and some outstanding
developments of Jesus’ followers
However, in the Catholic Church, there are other sources which play an important role in
defining the law. This includes the Magisterium, or teachings of the Pope and Bishops in

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communion with the Pope. Magisterium is the Church’s authority to give authentic interpretation
of the Word of God. This teaching considers the changing circumstances of social reality as well.
Business Ethics in Christianity
Like Islam, Christianity also puts great emphasis on ethics in all the business dealings. Though
there have been misconceptions about Christianity that it discourages gaining wealth, based on
the following verse from Gospel, where Jesus said:

“You cannot serve God and Wealth,” said Jesus (Bible, Matthew 6:24).

However, this sentence is not discouraging business, but the major purpose is to stress that
wealth is instrumental and should serve to higher human ends.
Like Islam, Christianity also encourages people to earn a living for themselves and their families

"If anyone does not take care of his own relatives, especially his immediate
family, he has denied the faith and is worse than an unbeliever."

There is focus on work so that one can share his earnings with the needy:

"The thief must no longer steal but must work hard and do what is good with
his own hands, so that he might earn something to give to the needy."
(Ephesians 4:28)

Christianity also preaches prioritizing work and to stay productive

"Our own people should also learn to make good deeds a priority when urgent
needs arise, so they won’t be unproductive" Titus (3:14).

Fair treatment of employees is also taught by Christianity:

“Masters, treat your slaves justly and fairly, because you know that you also
have a Master in heaven” (Colossians 4:1)

Another similarity with Islam is the focus on paying the workers in a just manner

"Look! The wages that you kept back from the workers who harvested your
fields are shouting out against you, and the cries of the reapers have reached
the ears of the Lord of the Heavenly Armies" (James 5:4)

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Apart from these teachings, Christianity demands people to be faithful in their work and avoid
laziness or carelessness.

Framework for Business Ethics in Hinduism

Hindu Law
Hinduism is one of the most ancient religion on the world. Hence the laws of Hinduism comes
from different sources. A collection of laws from these sources, which helps define the way
people should lead their lives, makes up the Hindu Law.
Sources of Hindu Law
The main sources of law that defines Hinduism are as follows7:
1. Sruti: Hindus believe that their law is of divine origin and Sruti contains the divine revelation,
the very words of deity. The authority of Sruti in Hinduism is well established. It comprises of 4
Vedas, 6 Vedanges and 18 Upanishads.
2. Smriti: While the Sruti is believed to be the word of God, Smirti is believed to contain the
teachings of god. The Smritis are the principal sources of law in Hinduism.
3. Customs: Custom is one of the most important sources of Hindu law. In case of conflict
between a custom and the text of the Smritis, custom overrides the text.
4. Nibanadhas: Despite being considered the divine law, there are conflicts in the teachings of
Smritis itself. Hence, to deal with these conflicts, a class of systematic 'digests' of dharma, called
Nibandhas, was been compiled.
5. Factum Valet: It is a doctrine of Hindu Law, which was originally articulated by the author of
the Dayabhaga, and also recognised by the followers of the Mitakshara, its main teaching is that
a fact cannot be altered by a hundred texts, where the texts refers to only the directory texts, and
not the mandatory texts.
6. Puranas: Puranas explain the laws of Smitris by the giving examples and are looked upon as
precedents. They, however, are not authority in law.
7. Judicial Decision: Judicial decisions have become sources of law in the recent times.
Moreover, legislation, as created and implemented by the Indian government, is the strongest
source of law in all Indian courts, which holds the highest jurisdiction authority to override any
other law.

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In conclusion, it can be stated that although in ancient times, the Hindus were bound to follow
only the law which they believe come from God, but now, with the changing world environment,
they have also some man made law and usually these laws have more power over the divine law.
Business Ethics in Hinduism
Ethical considerations are highly important in Hinduism9. One of the many considerations
involve making a distinction between what “is” and what “ought to be. The Gita, which captures
the essence of Hindu teaching and philosophy, is influential in Hindu business practice.
The teachings of Gita are helpful in influencing the management throughout the global business
practices. These teachings involve Yoga for gaining of mastery over the mind and the body,
Dharma for setting high goals in life, Karma to focus on performing one’s duties in just and right
manner, and Tat-Twam-Asi which is the recognition of the interconnectedness of nature to allow
the managers to look at the bigger picture and focus on the long term gains instead of short term
wins.

Perform your prescribed duty, for doing so is better than not working. One
cannot even maintain one’s physical body without work (B.G 3.8)
The five restraints, also called Yamas (truthfulness, not to steal, non-violence, sexual
moderation, non-possession) and the five observances, also called Niyamas (surrendering to god,
satisfaction, purity, austerity, self-knowledge) of Hinduism ensures that the followers of
Hinduism will only use rightful means in business.
Like Islam, Hinduism also does not specifically object to acquisition of material wealth as long
as it is obtained righteously and it must also be shared and distributed. Moreover, personal gain
is not the main purpose of work, rather the focus is on social welfare. Therefore Hinduism
teaches that an individual should only keep what is necessary, and distribute the rest.
In the Hindu tradition, religion tends to influence the way individuals approach the employees
and their work. Helping others and serving the customer is seen as a way to serve God and thus
helping others is encouraged throughout the business on a regular basis.
Finally, Hinduism teaches that there should be an alignment between a person’s skills and his
job. This implies that in a business environment the managers should be able to identify the skills
of the workers and must delegate the tasks accordingly. Leaders must exhibit the five basic
human values of peace, love, truth, righteousness, and good conduct with their employees and
customers.

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Comparative Analysis of the Frameworks

Although the ethical frameworks developed by the various religions mentioned above have
divine law as their major source of guidance. Which is why the basic teachings of all these
religions related to business ethics are quite similar (Refer to Exhibit 5 for a list of similar ethics
propagated by the religions). However, with the changing times, many alterations have been
made to the rules and principles propagated by these religions. The leading sources of both
Christianity and Judaism have often been accused of corruption, and it is the main reason why
the religious leaders of these monotheistic religions have been granted the authority make
decisions on their own. Today, even the lay individual can make a decision in Judaism.
Similarly, there are a number of man-made laws that have replaced the teachings of the Holy
books of Hinduism. It is because of this reason that these ethical frameworks have given into the
temptation of accommodating the modern practices, and hence there are many problematic
practices which are getting prevalent in the modern society, while these ethical frameworks have
stopped condemning those practices because of the influence of man-made laws and
modifications to the interpretation of the divine law.
Islam, on the other hand, believes that only Allah has the supreme power and authority to control
the universe. He is Just, Kind and Loving and only He can guide us towards the right path.
Muslims further believe that Quran and Sunnah are the words of the Almighty, and that only the
Holy Prophet (Sallallahu Alayhi Wa Sallam) was given the authority to communicate Allah’s
message to the Ummah. The Prophet himself is believed to be infallible, conveying only what
Allah requires him to convey, and his teachings are universal and final. This belief has built faith
of Muslims in Quran and Sunnah, and hence they don’t question the authenticity or logic behind
a message and try to abide by the rules of Sharia in every aspect of life. Even when the rulings
related to some issue are not found in Quran or Sunnah, the process of reaching a conclusion
either through Qiyas, Ijtihad or Ijma makes sure that the basic teachings of the divine law are
kept in mind and the decision is made collectively by a group of experts since it reduces the
chance of error.
To support this point, usury, which is a common business practice today, has been taken as an
example below:

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Case in Point – Usury

Usury, which is a dominant practice in today’s business world, has been taken as an example to
compare the effectiveness of different ethical frameworks that are developed in different
religions to handle ethical inquiries related to business dealings. Although the religious
institutions of Islam, Judaism, Christianity, Hinduism, and Buddhism have all being among the
critics of usury, because of its detrimental effects on society, yet it has gained a permanent place
in modern business system, to the extent that except for Islam, all other religions now consider
usury to be only the interest that is charged above the prevailing socially accepted range and is
no longer prohibited or restricted in any significant way. This proves that all the ethical
frameworks other than Islam have been distorted to some extent by the external influences.
A detailed account of the events which led to making usury permissible in the modern world by
different religions has been given below:
Usury in Christianity
Usury is featured many times in the Old Testament, where it is clearly condemned. Some of the
references are given as follows:

“Those who walk blamelessly, and do what is right”. They stand out because
they speak truth, stand by their promises and do not take bribes or “lend
money at interest” (Psalm 15)

Similarly, in Ezekiel, there is mention of a person:

Who avoids idolatry and adultery, gives food to the hungry and “takes no
advance or accrued interest” (Ezekiel 18,14-17).

However, the passages on usury in later books like Deuteronomy, are less restricting and allows
charging loan to the foreigners.

“On loans to a foreigner you may charge interest, but on loans to another
Israelite, you may not charge interest” (Deuteronomy 23,20).

Based on the authority of these texts, taking of interest by the clergy was forbidden by the
Roman Catholic Church. In 1311 Pope Clement V made the ban on usury absolute and declared
all secular legislation in its favor, null and void. However, pro-usury movements began starting

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growing stronger in the Middle Ages because of the contradictions in the Church's arguments
and differences of interpretations (There were differences of interpretation of a story in the New
Testament about a rich man who goes on a journey and entrusts his money to his servants. When
he returns, he praises the servants who have invested the money at interest but berates the servant
who has not done so) along with increasing commercialization. Finally, in the 16th Century, with
the Protestant Reformation, leading church figures such as Martin Luther and John Calvin
declared that interest is acceptable as long as it is not excessive.
All these events once again prove that the Christian law can and has been influenced by the
external factors and can succumb to the pressures of a few influential people, and can change its
rulings, no matter how disastrous their effects may be on the society.
Usury in Judaism
Usury has been criticized in Judaism and is either forbidden, discouraged or scorned based on the
text from several Biblical passages and Talmud, which is the central text of Rabbinic Judaism.
But despite the prohibition on taking interest, there is significant evidence that usury was
practiced in even in the biblical times and by 5th century BC, charging interest on loans had
become a custom among the Jews in Egypt. Charging interest was still, however, considered a
moral transgression, but with changing economic conditions, it was regarded as a necessity.
As a result, in 1607, interest was legalized by a synod of rabbis through hetter iskah2, meaning
the permission to form a partnership. This has become so routinely accepted that today all
interest bearing transactions are freely carried out in accordance with Jewish law. In fact, many
of the Jews aren’t even aware of the fact that usury is forbidden to them.
The teachings of the Jewish Law, therefore, have also been corrupted by the leaders, which is
evident from the above mentioned case of usury where the rabbis demonstrated a changed view
of morality from that of both Torah and Talmud2.
Usury in Hinduism
Like other religions, usury was condemned in Hinduism as well. The reference to usury can be
found in the Vedic texts of Ancient, as well as in the Buddhist text (600-400 BC) and the later
Sutra texts (700-100 BC), where usury is mentioned with much disdain, as “hypocritical ascetics
are accused of practicing it”.
However, the Hindu laws also faced corruption at the hands of its followers, which is evident
from the fact that by the second century AD, the concept of usury was flexed and the Laws of

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Manu of that time started referring usury to only the “Stipulated interest beyond the legal rate
being against (the law), cannot be recovered: they call that a usurious way (of lending)” (Jain,
1929: 3-10).
A Firm Stance: The Islamic Framework
Usury, which is called “Riba” in Islamic Shari’a has been forbidden in Islam based on the various
teachings of the Quran and from the life of the Holy Prophet (PBUH). There are four different sets
of verses in the Holy Quran which were revealed on different occasions. First Riba was mentioned in
Surah Ar-Rum (30:39), but this verse did not contain a prohibition against riba, but a subtle indication
to the fact that the practice is not favoured by Allah. It was then mentioned in Surah Al-Nisa (4:161)
where the term riba was used in the context of sinful acts of the Jews. However, riba was clearly
forbidden in the third verse of Surah Al-Imran

َّ ‫عفَةا ۖ َواتَّقُوا‬
3:130 - َ‫َّللاَ لَ َع َّل ُك ْْ ت ُ ْف ِل ُحون‬ ِ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا ََل تَأ ْ َُلُوا‬
ْ َ ‫الربَا أ‬
َ ‫ضعَافاا ُّمضَا‬

“O you who have believed, do not consume usury, doubled and multiplied, but
fear Allah that you may be successful.”

Finally the severity of the prohibition of riba was elaborated in detail in Surah Al-Baqarah (2:278-
279).

ٍ ‫الربَا إِن َُنت ُْ ُّمؤْ ِمنِينَ ● َف ِإن لَّ ْم ت َ ْف َعلُوا فَأْذَنُوا بِح َْر‬
َ‫ب ِمن‬ ِ َ‫َّللاَ َوذَ ُروا َما بَ ِق َي ِمن‬ َّ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا اتَّقُوا‬
2:278 -279 - َ‫وس أ َ ْم َوا ِل ُك ْم ََل ت َ ْظ ِل ُمونَ َو ََل ت ُ ْظلَ ُمون‬ ُ ‫سو ِل ِه ۖ َوإِن ت ُ ْبت ُ ْم فَلَ ُك ْم ُر ُء‬
ُ ‫َّللا َو َر‬
ِ َّ

“O you who have believed, fear Allah and give up what remains [due to you]
of interest, if you should be believers. And if you do not, then be informed of a
war [against you] from Allah and His Messenger. But if you repent, you may
have your principal - [thus] you do no wrong, nor are you wronged.”

The prohibition of riba was even reinforced by the Holy Prophet (Sallallahu Alayhi Wa Sallam)
during his last sermon. Moreover, by the time of Caliph Umar, the prohibition of interest was well-
established and the concept was well integrated into the Islamic economic system. Hence, despite
a few differences in interpretation by some jurists, the majority unanimously agrees that there is
no difference between charging interest and usury in Islam, both are forbidden, and the Islamic
law takes a very firm stance against charging even the lowest of interest rates.

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Hence, not only is usury forbidden in Islam, but also the ethical framework that has been developed
in Islam has kept the divine law intact. Islam being a way of life and a complete code of conduct
provides a better solution to the modern economic system, and instead of interest based banking,
which seems to be the unavoidable practice in today’s world, the prohibition on interest leads to
Islamic banking, which proposes an interest free ethical banking model. Islamic banks do business
by using contracts that are permitted by Sharia law, such as sale contracts (Murabaha), leasing
contracts (Ijarah), or partnership contracts (Musharkah).
The financial crisis of 2008 clearly showed that the derivative instruments, credit default swaps
(CDS) and mortgage backed securities to be specific, were the main reason behind the collapse of
a number of companies. Linking financing to real assets, which is the essence of Islamic banking,
as opposed to virtual money makes both all such instruments impermissible and hence by relying
on Islamic banking, we can eliminate all evils that are the by-product of interest namely social
inequality, economic instability, double billing and exploitation of the needy1.
Conclusion
Based on the analysis of the various framework of ethics to handle the business issues, it can be
concluded that the basic teachings of all the religions are essentially the same and based on the
welfare of the human beings with a focus on the protection of rights of the people. However,
with the changing economic environment, many of these frameworks have been modified by
man-made laws, which has reduced the effectiveness of these frameworks. Still, these
frameworks can act as a guiding principle and the people involved in the business dealings must
refer to their relevant framework to deal with any business related issues they may encounter in
their routine life.

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Exhibit 1 – Sources of Islamic Law

Sources of
Shari'a

Secondary
Primary Sources
Sources

Ijma
Quran
(concensus)

Qiyas
Sunnah (analogical
reasoning)

Exhibit 2 – Ahkam
Do Don’t
Obligatory Fard Haram
(Further classification: Fard or (Further classification: Haram, Tehreemi)
Wajib)
Recommended Mustahabb Makruh
(Further classification: Sunnah, (further classification: Tanzeehi,
Mustahabb, More Preferred) Makrooh, Less Preferred)
Neutral Mubah

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Exhibit 3 – Six Points to Consider for Hadith Authenticity

Related to Sanad Should be continuous
(Chain of transmission) Should be linked all the way to the Prophet
Related to Narrator Must be a practicing Muslim (is fair and doesn’t lie)
Reliability of transmission
Related to Matan Not isolated
(the body of Hadith) No hidden defect

Exhibit 4 – Classification of Hadith

Hadith

Mutawatir Mashoor (also

Kahabar-e-
(most widely known
Wahid
authentic) and authentic)

Accepted Rejected

Sound Daif

Tolerably sound Fabricated

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Exhibit 5 – Similarity in Business Ethics of Major Religions

Islam Judaism Christianity Hinduism
Focus on earning livelihood    
Rights of the buyer    
Rights of the seller    
Focus on honesty and integrity    
Focus on time management and    
productivity
Sharing income with the needy    
Fair treatment of the employees    
Seeking from Lawful means    

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References
1. Wayne A.M. Visser and Alastair McIntosh, A Short Review of the Historical Critique of
Usury, Centre for Human Ecology, First published in Accounting, Business & Financial
History, 8:2, Routledge, London, July 1998, pp. 175-189.

2. Silver A. (2008), Jews, Myth and History: A Critical Exploration of Contemporary

Jewish Belief and Its Origins (pp. 178). Retrieved from
https://books.google.com.pk/books?isbn=1848760647

3. Azmi Z., Business Transaction – An Islamic Perspective, Manipal University, Dubai,

UAE, 2015. Retrieved from http://globalbizresearch.org/files/t539_gjcra_ziaurrahman-
azmi-145637.pdf

4. Rashid, K. (2019). BEI Course Pack. 1802 SDSB Business Ethics & Islam (MBA 5101
S1-Lecture) Resources, LUMS

5. Essays, UK. (November 2018). The Four Main Sources Of Islamic Law Religion Essay.
Retrieved from https://www.ukessays.com/essays/religion/the-four-main-sources-of-
islamic-law-religion-essay.php?vref=1

6. Jewish Law, Retrieved from http://www.jewfaq.org/Halakhah.htm

7. Sources of Hindu Law, Retrieved from https://www.slideshare.net/badhon11-

2104/sources-of-hindu-law

8. Articles, Encyclopaedia Britannica, inc., Sanhedrin, Encyclopaedia Britannica, Retrieved

from https://www.britannica.com/topic/sanhedrin

9. Samuel L. Dunn1 & Joshua D. Jensen, Hinduism and Hindu Business Practices, School
of Business, Northwest Nazarene University, Nampa, Idaho, USA, 2019.

10. Melé, D. & Fontrodona, J. J Bus Ethics (2017) (pp 145: 671). Retrieved from
https://doi.org/10.1007/s10551-016-3323-3

11. Articles, Wikipedia, Jewish Business Ethics, Retrieved from

https://en.wikipedia.org/wiki/Jewish_business_ethics

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12. Rabbi Golinkin D. (2003), The Basic Principles of Jewish Business Ethics, Retrieved
from https://www.schechter.edu/the-basic-principles-of-jewish-business-ethics/

13. Rizvi S. M., Islamic Business Ethics, Al-Ma 'arif Books Canada, First Edition,2006,
Retrieved from https://www.al-islam.org/islamic-business-ethics-sayyid-muhammad-
rizvi

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