Journal of Islamic Marketing

Zakah as tool for social cause marketing and corporate charity: a conceptual
study
Shafiu Ibrahim Abdullahi,
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Shafiu Ibrahim Abdullahi, (2019) "Zakah as tool for social cause marketing and corporate charity: a
conceptual study", Journal of Islamic Marketing, https://doi.org/10.1108/JIMA-03-2017-0025
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Zakah as tool for social cause Social cause

marketing
marketing and corporate
charity: a conceptual study
Shafiu Ibrahim Abdullahi
Sule Lamido University, Kafin-Hausa, Jigawa state, Nigeria
Received 8 March 2017
Revised 26 August 2017
24 January 2018
6 July 2018
Abstract 8 July 2018
Purpose – This paper explores the role of Zakah in social cause marketing. Academic literature on Islamic Accepted 25 July 2018
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economics, finance and management mostly deals with the links that exists between Zakah and consumption,
neglecting important and strategic links with social cause marketing. This paper emanated from need to
outline social cause and the charitable role of Zakah in promoting Halal businesses, poverty alleviation and
sustainable development. Most works in the field of Zakah did not foresee the role of marketing. This is a
misjudgement, as this work showed that Zakah yields large and measurable social gains to help the society
and a firm.
Design/methodology/approach – Secondary sources were used in writing this paper. Available
literature in the form of journals, books, manuals and reports was referred to. As a conceptual work, the paper
does not test hypothesis or pretends to provide empirical evidences. It uses mathematical economics in
arriving at some of the conclusions. Findings were derived through deductions and critical discourses, not
through crunching of primary data.
Findings – The paper shows how Zakah, Halal consumption and corporate social responsibility are
connected and highlights the role of Zakah as a social marketing tool. It shows how Zakah affects
consumption through marginal propensity of Zakah recipients who spend Zakah money on basic needs.
Research limitations/implications – The paper looks at the broad aspects of Zakah and social
marketing. How to make Zakah a pillar of Islamic firms’ social cause programs shall be the focus of future
academic works in this area.
Originality/value – The paper is unique in drawing attention of Islamic firms to the effectiveness of Zakah
in building a corporate image. It draws the attention of firms, activists, academics and governments to
functions of Zakah that have not been studied in depth.
Keywords Social marketing, Corporate social responsibility, Halal market,
The Muslim consumption pattern, Multiplier analysis, Game theory, Demand creation, Zakah
Paper type Conceptual paper

1. Introduction
About one in every four humans in the world is a Muslim. This goes with important
geopolitical significance in global politics and economics. The total gross domestic product
(GDP) of the Islamic world was put at US$16.2tn in 2014, based on combining the overall
GDP of all Organisations of Islamic cooperation (OIC) countries against total world GDP of
US$107.9tn (SESRIC, 2015). This is a far cry from the population strength of the Muslim
world, and it is a pointer to the underdevelopment of Islamic countries. OIC member
countries have one of the worst incidences of poverty in the world. Over the years, there
were efforts towards solving economic problems of the Muslim world using mainstream
economic ideas that were tested elsewhere around the world. In the opinion of many Journal of Islamic Marketing
scholars, these policies failed because of failure to understand the peculiar nature of the © Emerald Publishing Limited
1759-0833
Islamic world (Chapra, 1992, 2000). It was in a bid to find new solutions that research studies DOI 10.1108/JIMA-03-2017-0025
 JIMA into Islamic economics were undertaken over the past 50 years. Zakah has been identified as
an important tool for solving economic problems of the Islamic world. Zakah is generally
understood as compulsory religious alms given by the well-to-do members of an Islamic
society to the less privilege members among them. Other instruments, identified as
necessary for the development of the Muslim world, are interest-free banking (financial
restructuring) and Islamic business (economic restructuring) mechanisms (Chapra, 1992).
But, both the financial and economic restructuring cannot take place in vacuum. The
same thing also applies to Zakah collection; the total Zakah collection will be low where
Zakah-able assets and services are few. Thus, there is need for an environment with
adequate number of wealth creators (producers) and consumers. This bring the issue of
Halal (lawful) consumption into focus, as it is related to the mentioned forces and as they
tend to affect one another within the larger macroeconomic environment. The consumption
pattern of Muslims in, for example, Senegal, Afghanistan, Oman or Jordan is not very
different from that of Muslims in Turkey, Bangladesh, Malaysia, Egypt or other parts of the
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world. They pay more attention to Islamic restrictions on goods and services to be
consumed (Ahmed, 2002). For example, Muslims do not patronise the following items:
alcohol, pig meat and animals slaughtered without invoking the Name of Allah. Indonesia,
the most populous Muslim-majority country in the world, has recently legalised regulations
on Halal products guarantee (Ismoyowati, 2015). Pakistan assembly has also recently
passed Pakistan Halal Authority Bill. A study by Noor and Moi (2015) found that four
Maghreb (West of North Africa) countries (Algeria, Libya, Morocco and Tunisia) hold great
potential for Halal industry business, among other factors owing to their large Muslim
population. The global Halal industry has witnessed an unprecedented growth in the past
two decades. Although, most customers of the growing Halal industry are middle-income
Muslims, there is more room for lower-income earners, as the industry grows and diversifies
into newer markets. This is particularly true in areas such as Islamic pharmacy, Halal
consumer products, tourism, hospitality and Islamic microfinancing. Recent studies found
Nigeria to be open to Islamic banking, Halal products and services such as Islamic
marketing and advertising (Abdullahi, 2017). Halal foods’ popularity is increasing even
among non-Muslims around the world due to health and hygienic factors.
The literature on Islamic economics and managements mostly treated the linked between
Zakah and consumption neglecting important and strategic link to social cause marketing.
Thus, this research problem emanated from the need to outline the social cause and the
charitable role of Zakah in promoting Halal businesses and helping to achieve poverty
alleviation and sustainable development. Most works in the field of Zakah and consumption
did not foresee any role for marketing and advertising in this field. This is a misjudgement,
as this work will endeavour to show that Zakah and related social cause projects yield
larger, measurable social gains to help a large number of people while at the same time
helping (whether intentionally or otherwise) to promote the image of the sponsor of the
projects. Thus, this work is an attempt to bridge that gap in the literature. For example,
Darigan (n.d.) described cause branding which is a segment of social cause marketing as “A
business strategy that integrates a social issue or cause into brand equity and organisational
identity to gain significant bottom-line and community impacts”. Social cause marketing
itself is part of the larger field of corporate social responsibility which is defined as “a
commitment to improve [societal] well-being through discretionary business practices and
contributions of corporate resources” (Kotler and Lee, 2005). While, corporate responsibility
marketing is understood as a “communication tool that reinforces the brand equity”
(Hoeffler and Keller, 2002). Charitable activities which form the core of corporate
philanthropic functions entail providing volunteering support (whether in the form of
 services or goods) for the disadvantaged or helpless members of society. But, not all Social cause
philanthropic activities of Zakah-paying institutions fall under the widely used conventional marketing
understanding of social cause marketing. According to MacFadyen et al. (2003), social
marketing is different from commercial marketing because of the focus on improving
individual and societal well-being. Thus, social marketing is not just about accepting social
ideas or influencing attitude. The aspects that Zakah is related to are mostly corporate
philanthropies through firm-giving to the society and, to some extent, sponsorship of
modern and traditional education. From the definition of Zakah provided above, it will also
be clear that it is a purely religious undertaking, although, it has socio-economic
implications. Thus, the focus here is not necessarily on only how to bring about positive
changes in the behaviour of individuals as understood in the conventional sense of the term.
There is supposed to be some differences between social cause as understood in the
conventional field and social cause understanding in Islamic perspective. Social cause in the
Islamic perspective shall include socio-religious causes. These socio-religious causes include
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using Zakah proceeds in helping the needy and admonishing people, especially the youth, to
imbibe sound moral characters and productive activities. Thus, the whole social cause
activities of an Islamic firm is centred around adhering to Islamic teachings in conducting
any cause marketing undertaking. An Islamic organisation like any other organisation
needs a good strategy to conduct its business. According to Quinn (1998), “a strategy is the
pattern or plan that integrates an organisation’s major goals, policies and action sequences
into a cohesive whole”. Using game theory, this paper explains how an Islamic firm decides
among competing strategies as its disposal vis-à-vis its rivals. This is done with the aim of
providing a broader picture of how an Islamic firm navigates between the complex worlds of
conventional strategies and their Islamic counterparts (strategies). An Islamic firm has the
option of using advertising, cause-related marketing, socio-religious strategy like Zakah
and/or traditional marketing tools in building its customer base and cementing relations
with its host communities. For the poor consumer, the paper shows how Zakah proceeds and
philanthropic gestures of firms help supplement his small income in providing for his
consumption needs and explains how the firm can tap the Zakah recipients as source of
market for its products and services.

1.1 Objectives
The main objective of this work is to highlight the connection that exists between Zakah,
consumption and social cause marketing. But, the specific objectives are:
(1) To draw the attention of modern Islamic firms to the effectiveness of Zakah in
building a corporate image.
(2) To draw attention to functions of Zakah that were not well covered by the
literature.
(3) To contribute to the field of social cause marketing from an Islamic perspective.
(4) To outline the social cause and charitable role of Zakah in promoting Halal
businesses and helping achieve poverty alleviation and sustainable development

1.2 Methodology
Mainly secondary sources were used in writing this work. Available literature in the form of
journals, books, manuals and annual reports was referred to during the writing of this
paper. As a conceptual work, the paper does not test any hypothesis or pretends to provide
empirical evidences. It makes use of mathematical economics tools in arriving at some
 JIMA conclusions. Thus, its major findings are derived through deductions and critical discourses,
not through crunching of primary data. The paper is divided into four sections. Section 1
introduce the paper; Section 2 provides detailed literature review on Zakah, consumption
and social cause marketing. Section 3 introduces the use of Zakah in social cause marketing.
This section is further divided into two – Section 3.1 deals with Zakah, consumption and
social cause marketing, and Section 3.2 uses game theory to explain the behaviour of an
Islamic firm. Section 4 provides concluding remarks.

2. Literature review
2.1 Institution of Zakah in the Muslim world
Kahf (1989) defined Zakah as, “a transfer payment from the wealthy to the poor for the
purpose of redistribution of wealth and income in the society”. Islam made Zakah a means
for wealth distribution in any Islamic community. Its main objective is to provide a system
where economic balance between people is maintained (Abu Bakar, 2007; Suhaib, 2009).
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According to Kahf and Al Yafai (2015), Zakah as a social security system has been in
existence in the Muslim world for nearly 14 centuries, while the Western world only
established social security systems during the first two decades of the past century. Though,
it is on record that the Western world was aware of Islamic Zakah system and scholars
wrote many academic works on it (Belouafi and Belabes, 2016). Over the past 40 years,
Zakah, both in theory and applications, has received a fair amount of attention from Islamic
economists. But, this is of less relative significance when compared with the attention
generated by theory and applications of Islamic banking and finance during the same period
of time (Belouafi and Belabes, 2016). On the jurisprudential aspect of Zakah in the modern
period, the works of Sheik Yusuful Al-Qardawi and that of other Fiqh (jurisprudence)
scholars have made significant contributions today in helping Muslim scholars trained in
conventional economics to grasp Fiqh ruling on Zakah matters. His voluminous Fiqh Al-
Zakah (jurisprudence of Zakah) has provided Islamic economists with reference on Sharia
(Islamic law) rulings pertaining Zakah. Likewise, the periodic rulings provided by the Fiqh
(jurisprudence) academy of the OIC and Fatwas (jurisprudential edict) issued by the
academy have proven effective in attending to contemporary developments concerning
Zakah. Its distributive functions in an Islamic economy make the poor to be economically
relevant (Abu Bakar, 2007; Suhaib, 2009). In the present period, Zakah is imposed on all
contemporary forms of wealth and income whose criteria has been enumerated by Muslim
scholars with the exception of Mal (wealth) means for personal use or consumption (Kahf
and Al Yafai, 2015).
Absence of effective Zakah institutions has made some Imams (Islamic scholars) use the
proceeds of Zakah for personal use, as Akanni (2006) observed in South West Nigeria, and
Abubakar (2013) in Jos, Nigeria. This caused the Zakah-paying public to lose trust in the
system, and hence, resorting to paying Zakah by themselves or not paying Zakah at all. An
important aspect of building trust and increasing collections, is for collection agencies to
prove their ability to use funds (Ahmed, 2008). In Malaysia, some Zakah institutions have
outsourced collection business to organisations they established, who use modern
techniques for collection (Ahmed, 2008). Efficient and timely collection of Zakah is very
important in the eyes of Sharia (Islamic law) (Suhaib, 2009). In terms of Zakah works, the
Islamic community is divided into two sections: Zakah payers and Zakah receivers (Hassan
and Khan, 2007). Scholars have classified Zakah distribution into two: Zakah distributed for
consumption purpose and Zakah distributed for investment (Ahmed, 2008). Zakah
distributed for the purpose of investment lifts the poor out of poverty than Zakah means for
consumption, and it provides alternative sources of income, such as educational
 scholarships, trainings, physical capitals and financial capitals. But, consumption Zakah Social cause
provides the poor with cash to take care of his needs. In the business of Zakah collection, marketing
marketing increases Zakah collection (Ahmed, 2008). In Nigeria, only Zakah institutions in
South West and North Central have aggressively campaigned in the media; those north of
the country lag behind. Among the various models of Zakah administration around the
Muslim world, that of Sudan is considered the most comprehensive (Kahf and Al Yafai,
2015).

2.2 Consumption in Islamic framework

Various theories exist to explain consumer behaviour in the conventional economic setting.
Some of these theories include Keynes’ conjecture that explains consumption as a function of
income and Fisher’s intertemporal choice theory. While Keynes sees current consumption as
dependent on current income, Fisher sees consumption as dependent on income consumer
expects to get over his entire lifetime (Mankiw, 2007). Others include Modigliani life-cycle
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hypothesis that sees saving as explaining how consumer moves income between times;
Friedman permanent income hypothesis sees consumption as depended on permanent and
transitory incomes; and Hall’s random walk hypothesis describes consumption as
unpredictable. Just like with most conventional economic theories, these hypotheses see
consumption as materialistic undertaken with purely selfish interests in mind, by the person
undertaking the consumption. Unlike the conventional consumption theory, Islamic
consumption theory[1] revolves around issues of morality and religiosity. Consumption is
undertaking within the band of what is allowed by Islam. For example, under the Islamic
system, a Muslim’s consumer basket is lower than a non-Muslim’s, because of religious
criteria of Halal-Haram (lawful-unlawful) (Khan, 1984 and Metwally, 1997). The Halal
consumption-space is further divided into consumption of lower-income Muslims (Zakah
recipients) and upper-income Muslims (rich Zakah-paying Muslims): CH = CL þ CU, where
CH – Halal consumption, CL – consumption of the lower-income Muslims and CU –
consumption of the upper-income Muslims. In this theory, like in all other Islamic economic,
financial or management theories, ethics remain the central focus – the main distinguisher
between conventional models and the Islamic ones. The Islamic consumer theory, according
to Khan (2013), did not need a conventional framework of analysis of consumer behaviour,
although it might be used to analyse non-Islamic consumption pattern: “The conventional
analysis of consumer behaviour may still remain valid in all such situations where
instinctive desires and not the ‘needs’ are the driving force”. The following Qur’anic verses
explain the behaviour of a Muslim consumer:
Squander not your (wealth) in the manner of a spendthrift. Verily spendthrifts are brothers of the
evil ones (17:26-27).

Make not thy hands tied (like a niggard’s) to thy neck. Nor stretch it forth to its utmost reach lest
you become rebuked and destitute (17:29).
The conventional consumer theory “may still remain valid to study unusual, undesirable,
unhealthy patterns in consumer behaviour. It will still be relevant to study what may
be called the dark side of human nature” (Khan, 2013). But, at the same time, Islamic
literature recognised consumption externalities, some level of conspicuous consumption and
the insatiable nature of human desire (Shaikh et al., 2017). Hence the Islamic emphasis on
moderation and use of moral filter. A Muslim consumer spends his consumption income
taking into consideration not only his desire to satisfy his worldly needs but his other
desires for rewards in the hereafter. Hence his motivation to spend on other people’s
 JIMA consumption through charities and other noble causes. Muslims consumers are also
risk-averse (Wilson and Liu, 2011). The notion of consumption maximisation found in
conventional setting is seen differently under the Islamic setting. An Islamic consumer
according to Kahf (1996) is a maximiser, though the basket of what he maximises is different
from that of a conventional consumer; he maximises Hasanat (good deeds) through an
Islamic function rather than an economic utilitarian function. Thus, instead of an Islamic
consumer caring for things that satisfy only his self-interest, he performs good deeds to help
the consumption of the needy. Khan (1984), on the other hand, argued that a Muslim
consumer spends his money (C = E1 þ E2), E1 = to meet his needs and that of his family, and
E2 = to meet the needs of others for the sake of Allah. A Zakah recipient’s income according
to Fahim Khan is EL = YL þ E2 (Khan, 1984), where YL is his own income, E2 = the amount
of transfer income he received including Zakah. At some point, the growth in income of a
Zakah recipient moves him from the rank of Zakah receivers to that of Zakah payers (Khan,
1984). When it comes to consumption moderation, benevolence and avoidance of
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extravagancy are the core of Muslim consumption habit (Khan, 1984; Shaikh et al., 2017).
Thus, under an Islamic setting, creating a humane and discipline consumer has priority over
assigning too much significance to the quantity of commodity or service consumed. This
also explains the reason why Zakah and voluntary charity were included in consumer
analysis under the Islamic economic system. But, this does not mean a Muslim shall
unnecessarily deprive himself for the sake of satisfying others. Since at the end, the level of
benevolence a Muslim consumer decided to show to those in need depends on the level of his
Taqwa (Islamic faith).
The above treatment of consumption is from the point of view of conventional and
Islamic economists, but academic and professional marketers have discussed Islamic
consumption using their own lens. Unlike economists who view consumption from the point
of view of satisfaction a consumer derives or the need to strike a balance between savings
and consumption, marketers view it from a marketing perspective. Hence to marketers,
consumption is more about the size of market for a particular brand and the mechanism to
identify a loyal customer. Thus, it is an opportunity for corporations to increase their market
shares by providing what a market segment required. Just like other labels or market
segmentation, Halal is recognised around the world as a brand (Wilson and Liu, 2010;
Alserhan, 2010). Halal consumption (which is a term more associated with marketers than
economists who prefer the term Islamic consumption) as a brand has become a kind of
assurance/guarantee for modern Muslim consumers (Wilson, 2014; Alserhan, 2011). Both
Islamic economists and their marketing counterparts share one goal in common, acceptance
of Sharia (Islamic law) as a guiding principle in building their theories. Thus, the time frame
for their analysis is not restricted to this world alone but involves the life after death. For,
example, Wilson and Hollensen (2013) further extend the concept of customer long-term
value (CLV), which initially treated only the assessment of the value of customers (in
monetary terms) in long-term relationships, to calculate life after death. The idea of the
extension first proposed by Haniffa and Hudaib (2011) adds a customer afterlife time value
(CALV) to CLV to get an actual value which is higher than the traditional costs of customer
acquisition (COCA) when added up. Wilson and Hollensen (2013), on their part, tried to give
hypothetical monetary values to the inequality between CLV, CALV and COCA. But, the
problem with their analysis is that it is difficult to quantify (in term of monetary value) the
reward one expects to get in the hereafter, just like the problem Islamic economists
encountered when they tried to quantify rewards in the hereafter. Despite that they observed
that it is more profitable for business to take afterlife into consideration in societies that
believe in that than to assume they did not exist.
 2.3 Concept of corporate social responsibility Social cause
Davis and Blomstrom (1975) defined corporate social responsibilities as the “‘duty of the marketing
internal corporate decision makers to take action which protects and improves the welfare of
society as a whole along with their own interests”. McWilliams et al. (2005) defined corporate
social responsibility as:
Situations where the firm goes beyond compliance and engages in actions that appear to further
some social good, beyond the interests of the firm and that which is required by law.
In the Western world, the concept of corporate social responsibility is century old (Hindle,
2011). But, according to Bronn and Vrioni (2001), the modern concept of corporate social
responsibility has it origin in the USA in the 1960s. Even under conventional system,
recent studies have shown that there is a positive relationship between corporate social
responsibilities and financial performance, “the social is profitable and that the profitable
is social, thereby originating a positive feedback virtuous circle” (Rodriguez-Fernandez,
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2016). Another study (Rivera et al., 2016) finds a positive relationship between corporate
social responsibility and customer satisfaction. Recently, there is an emergence of works
that treated corporate social responsibility from the point of view of Islam. The
relationship between firms and its stakeholders is effective in an Islamic economy which
has three sectors, namely, public, private and voluntary (Faridi, 1983). Abdullatiff (2009),
observed that “there is need that the IFIs should create a congenial atmosphere of
strategic linkage between Islamic charity organizations and business companies”.
Ethical concerns have always directed Islamic firms from wasteful advertisements
towards good moral causes sanctioned by Islamic teachings. The volume of economic
resources going to the voluntary sector of an Islamic economy depends on the level of
Taqwa (Fear of God) of the Muslim community, as well as the level of wealth of the
community.
The third sector of a three-sector Islamic economy, i.e. the voluntary sector, is defined by
Faridi (1983) as encompassing:
All such individual and social activities, which are not by intent or design, undertaken to attain
any economic or material benefit for the doer or doers, but generate wide ranging economic
repercussions.
A socio-religious cause is an important signalling tool for Islamic businesses, just like
pricing and advertising signalling. But, a socio-religious cause is better at signalling because
it is a pointer to trust and reliability of the business. It shows that business can eschew
pressing needs to make profit for helping society through timely payment of Zakah,
community development activities and caring for environmental causes. An average
Muslim believes in signals from socio-religious causes than price or advertising.
Commitment to a moral cause signals quality, showing the firm is committed to giving
society something good. Social responsibility (Fardh) forms what Naqvi (1997) listed as an
axiom under ethical foundation of Islamic economics. In conventional literature, a social
cause is treated under corporate social responsibility i.e. cause-related marketing (Bronn and
Vrioni, 2001). Consumers are wary of a company’s intention with corporate social
responsibility, hence not all cause-related marketing succeeds in building consumers’
confidence (Rivera et al., 2016). Wastefulness as promoted by advertising messages is
detested by the more ethically oriented consumers (Abdullahi, 2018). But, advertising forms
part of non-price competition strategy between mainstream firms (Bagwell and Ramey,
1994). The vastness of the field of corporate social responsibility has continue to increase as
its applications grow.
 JIMA 3. Use of Zakah in social cause marketing
3.1 Social cause and charitable functions of Zakah
Zakah, through its effect on consumption (by increasing marginal propensity to consume),
affects (increase) demand for goods and services (Metwally, 1983; Khan, 1984 and Metwally,
1997). According to empirical work by Suprayitno et al. (2013), Zakah increases
consumption; this is in line with previous theoretical studies by Khan (1984), Metwally
(1983) and Kahf (1996). Hence, under the Islamic system, Zakah (income) can be categorised
among factors affecting demand for commodities/services of the lower-income group,
through its effect on income and consumption. This fact shall be noted by professionals in
Islamic marketing and advertising industry. Who shall incorporate it in the theories of
Islamic marketing, developed marketing models to cater for Zakah receivers, through
advertising and marketing at periods of Zakah payment, such as before, during and after
Ramadan (Muslim holy month of fasting) to tap an untapped market, but in a way that does
not contradict Islamic teachings. In some ways, it aligns with some clever companies’
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strategy of making use of “wealth at the bottom of the pyramid” (Prahalad, 2005). There are
untapped marketing opportunities among the poor people that the modern business firms
have been overlooking. By introducing product/service needed by poor Zakah recipients,
Islamic firms boost their market share and growth of the industry and the wider economy.
The process of demand creation through introduction of new products boosts economic
growth in a nation’s economy (Aoki and Yoshikawa, 1999). Thus, Zakah has an important
role to play in social, promotional and social cause marketing activities of firms in Islamic
societies. According to Wilson and Liu (2011), “Muslim consumer behaviour and corporate
practices point towards perspectives which reframe the Halal’.
An act of charity by an Islamic firm, apart from expected reward in the hereafter, has
positive benefits here for the firm (Metwally, 1992). As Metwally (1997) argues:
Spending on charity or good deeds, in a society which wholeheartedly believes in it as the means
to achieve God’s satisfaction, must create a goodwill for the firm’s products, which in turn helps
increase the demand for them at given prices
In this arrangement, Zakah-paying firm such as Islamic banks can as well generate goodwill
in the eyes of their clients by being seen as a good company that complies with Islamic
injunction of paying Zakah. This is a form of advertisement by the Islamic firm (Metwally,
1997). Apart from that, the notion that supply creates its own demand means that overall
Zakah distributed in the economy shall increase the demand for consumer goods and
services including the service/product of the Zakah-paying company (Appendix 1).
Therefore, Zakah-paying firms benefited by indirectly increasing the demand of its own
goods or services. This is where Zakah in kind comes in. Islamic firms can sell their product/
service to authorities managing Zakah, such as training services, business equipment, raw
materials and working tools which shall be (later) delivered to Zakah recipients. Under this
scenario, Zakah in kind will turn out to be a source of market for Islamic companies. Trained
Zakah recipients can supply labour to the Islamic firm by using their trainings to serve the
company as employees (less-skilled workers). Metwally (1992) suggested that as part of its
charitable activities, an Islamic firm can employ higher number of workers beyond the level
allowed by profit maximisation.
Islamic banks can play the role of both Zakah payers (their own Zakah due) and Zakah
collectors on behalf of the government or bodies responsible for collecting Zakah, like that
found in Pakistan and some Muslim nations. Islamic banks can as well sell their services to
Zakah payers (who patronises Halal industry), thereby creating demand for their product/
service. Thus, Islamic banks (Halal firms) benefit Zakah in two ways – being viewed as a
 good Islamic company that pays Zakah on time has an advantage of increasing goodwill Social cause
among the public and through acting as a Zakah-collecting agent, an Islamic bank increases marketing
its customer base by selling its services to members of the public who visit to pay Zakah.
This is a strong target for that purpose. Members of the Zakah-receiving population are also
a potential target for Qard Hasana (benevolent loan) given by Islamic banks. Qard Hasana
will complement Zakah income and remove the poor from Zakah receivers through
developing his business, later on becoming future Zakah payer. For non-financial Halal
companies, they benefit from being seen as paying Zakah, as Muslims will patronise their
goods/services – including beneficiaries of Zakah who are classified as having higher
marginal propensity to consume (MPC). Though, not treated in this paper, Zakah also
positively affects companies through its other function of inducing investment which
translate into increased supply of capital for Islamic firm. The next section looks at the
behaviour of an Islamic firm inclusive of social cause marketing and advertising.
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3.2 Social cause marketing activities of an Islamic firm

Looking at previous academic works on Islamic firms, there is no unique definition of
Islamic firms, but various scholars have outlined it major features. Metwally (1992) put the
features to include economic trusteeship, and profit maximisation is not pursued with the
sole aim of accumulating wealth and spending on charity. Other features include, zero-
interest finance (Samad, 2008), existence of both equity and efficiency (Akin and Mirakhor,
2016), economic agents seeking Maslahah (public interest) instead of utility (Khan, 2002),
operating within the principle of no risk no gain (Khan, 2002), attainment of Falah [well-
being in both worlds] (Al-habshi, 1992) and zero production of Haram (Ahmed, 2002). A
definition of Islamic firm provided by Baldwin et al. (2002), put it:
As a community of autonomous people (individuals) who are contractually bound to co-operate
with each other to employ and account for factors of production to produce goods and services
with an ultimate objective to sell and profit
But, the definition failed to touch on the ethico-religious components of an Islamic firm mode
of operation. Though, the authors acknowledge that the Islamic theory of a firm was a work-
in-progress and their definition only focuses on the financial (contract) side of the firm
operations. But, one consensus on the nature of Islamic firm is the central role played by
ethics in the behaviour of the firm (Metwally, 1992, 1997; Yusof and Amin, 2007; Azid,
Asutay and Burki, 2007; Akin and Mirakhor, 2016). Attainment of Falah is at the centre of
all Muslim economic activities whether as a producer (firm) or consumer (individual) in an
Islamic economy (Samad, 2008). The profit function of an Islamic firm taking cognisance of
the need to pay Zakah, is thus:
P ¼ pq  F  CðqÞ  A  Z . . . ðZ > AÞ

Where:
p = price;
q = quantity;
F = fixed cost;
C = cost (variable);
A = Advertising; and
Z = spending on socio-religious causes.
A mathematical enumeration of the profit function of a conventional firm can be found in
Chiang (2005) and Henderson and Quandt (2003). But, a typical conventional profit function
 JIMA does not include the variable Z which stand for social cause activities that include
disbursement of Zakah.
Metwally (1992) argued that Islamic firms differ from conventional firms, in terms of
both goals and economic policies and strategies. Here is explained a scenario where an
Islamic firm is competing with a conventional firm in a market where both have two
strategies in controlling market share: advertising and socio-religious cause. A previous
study (Sethuraman and Tellis, 1991) has calculated the elasticities of substituting a price-
discounting strategy for advertising or the other way round in a conventional firm setting,
but here we are only showing how advertising is substituted for social cause functions or
vice versa. Only empirical works can show whether there is a trade-off between social cause
functions and advertising. Several studies have doubted the contribution of advertising to
sell (Metwally, 1975; Aaker and Carman, 1982). Bagwell (2007) quip that, “the economic
implications of advertising are subtle and controversial, and many of the most important
questions remain unresolved”. Another study (Tellis, 1988) has shown that price cut, which
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has a direct impact on people’s welfare, has more an effect on sale than advertising. Socio-
religious cause here includes giving charity (Sadaqah), paying Zakah as at when due, being
environmentally friendly, being fair to all parties and sponsoring community development
programs. It involves some form of sustainable development as advocated by Islamic
scholars (Hasan, 2006, 2011). Conventional advertising literature has mostly side-stepped
the role of morality in business development (Bagwell, 2007), instead of placing emphasis on
secular advertising and other selling strategies. But, socio-religious cause is a tool for
achieving Falah both in this world and the next. In the opinion of some Islamic economists,
attainment of falah is the main objective of an Islamic firm (Yusof and Amin, 2007; Azid
et al., 2007; Samad, 2008).
The central idea behind game theory is built on the premises that each participant
outcome depends not only on his strategies but also that of his opponent(s). The problem
now is to select an optimum strategy taking into consideration the probable action of the
opponent (Table I) . Under this scenario, a typical conventional firm will make use of
advertising (X) strategy, knowing that an Islamic firm is ethically oriented and will perform
better using socio-religious cause like Zakah (Z). While it is in the best interest of an Islamic
firm to prioritise socio-religious causes, knowing conventional firms are not limited by the
kind of advertisement they can employ (nothing like a moral restrainer to limit advertising).
See Appendix 2 for mathematical treatment of this game. But, even in the conventional
system, companies are being forced by changing circumstances to focus on common good of
the society in general and companies’ stakeholders in particular (Rodriguez-Fernandez,
2016; Rivera et al., 2016). In case an Islamic firm decided to use both strategies, emphasis
should be on socio-religious causes. According to Metwally (1992), under the Islamic model,
there is always place for informative advertising, and spending for charity or good deeds
cannot be a total substitute for advertising. According to Bagwell (2007), in the market with
many participants, advertising may help firms increase market shares. It can also be
damaging when it is excessive. Where Islamic firm uses advertising (x), advertising is
undertaken to march-products-to-buyers as well as a channel for passing information. This
may be contrary to the strategy adopted by some conventional firms who may emphasise

Table 1. Conventional firm

Options available to Advertising Moral/social cause
competing firms in Islamic firm Advertising z, X z, x
the model Moral/social cause Z, X Z, x
 advertising over moral causes, even when done at the expense of society’s welfare[2]. Social cause
Advertisement results in externality when it fails to increase output in an industry, instead marketing
resulting in higher prices and re-allocating market between existing participants, what in
the literature is known as persuasive advertising. Advertising is good where it informs
consumers about quality products, what Bagwell (2007) called, “quality-guarantee effect”.

4. Implications
The implications of this go beyond the profit to be made by these firms, as it plays an
important role in sustainable development. Cause-related marketing under an Islamic
setting has been shown to be directed by ethical teachings of Islam. This is not restricted to
only behavioural changes but also extends to how firm can help improve societies’ well-
being. How an Islamic firm handles its cause-related activities and community development
programs is very important in shaping the way the public view the firm. Islamic firms shall
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invest in developing their own social marketing agenda that is in line with Islamic
marketing principles available today. This will go a long way in helping the growth and
development of these firms. The paper shows the relative importance of social cause
marketing over advertisement using game theory. It shows that equilibrium is possible
where Islamic firms adopted socio-religious causes like Zakah and its associated activities
when conventional firm adopted advertising. Thus, Islamic firms shall tally their strategy
towards moral social causes rather than waste their money on advertisements. For
advertisers and marketing communication professionals, this paper show how Zakah,
consumption and demand are linked. It theorises how Zakah affects consumption through it
tendency to increase MPC of the Zakah recipient who in turn spend Zakah money on basic
needs, thus increasing market for basic commodities and services. It identifies periods of a
year when Zakah businesses of collection and distribution take place. Businesses and
organisations who produce basic goods and services required by poor Zakah recipients shall
focus on Islamic advertising and marketing in this period.

5. Conclusion
Advertising by Zakah institutions in the Muslim world is seen as unconventional; hence, not
much attention has been given to it. To increase Zakah collection, emphasis shall be on
marketing Zakah services to the ignorant public. Zakah institutions shall be established in
parts of the world with a sizeable Muslim population. Zakah funds support income-
generating activities of Zakah receivers, empowering rural and urban poor to support
themselves in income-creating businesses. The implication of doing so on economic
development of these countries is far-reaching, as it will boost poor people’s income. Annual
Ramadan (Muslim month of religious fasting) trade fair has been in operation for some
years now in Muslim communities. This trade fair market targets the Ramadan period when
Halal companies and faithful Muslims come together to sell and buy Halal goods and
services. Ramadan, as period when a lot of Islamic activities take place, is important for
companies who want to target Muslim consumers. There is a noticeable presence of
strategic advertisements in business premises own by Islamic firms, to tap each other
customers, who after all form the segment of the larger Muslim Ummah (society). Thus, the
sense of Islamic brotherhood helps in marketing Islamic business. Muslims are generally
desirous of adopting Islamic business system, through their acceptance of Halal brands such
as Islamic Bank, Takaful (Islamic insurance) and Halal consumption.
 JIMA Areas for further research
The field of Islamic marketing and advertising and its relationship with Zakah and
consumption habit of Muslim consumers holds great potential for Islamic economies looking
at the increasing acceptance of Islamic business models around the world. This paper looks
at only the broader aspects of the issue. There is a need for more academic works to go into
details of it all. As firms adopt Islamic business ethics, there is a need for empirical works to
measure the impact of moral social cause vis-à-vis advertising on the growth and
development of these firms as well as elasticity of substitution between socio-religious
causes and advertising in firms that operate according to Islamic guidelines. Instituting
Zakah as a central pillar of Islamic firms’ social cause activities shall be a concern of future
research in this area. At this point, the paper has helped further the understanding of cause-
related marketing, Zakah and Halal consumption and how they relate to behaviour of an
Islamic firm and individual consumers.
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Notes
1. Owing to the evolutionary nature of modern Islamic economic theories, there is no advanced
theory of consumer behaviour under modern Islamic framework yet. Islamic consumption theory
is, therefore, a work-in-progress.
2. There are many conventional firms that engage in social and sustainable acts beyond making
profit for their shareholders.

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 JIMA Appendix 1. Multiplier analysis of zakah, consumption and demand
A multiplier relationship, thus, exists between Zakah, consumption and demand, and it shows how a
percentage increase in Zakah to the poor shall increase consumption which resulted in higher demand
for goods/services.


DD ¼ f C : g½Z  (A1)
DD – demand creation;
C – consumption; and
Z – Zakah.
The above equation holds in case of poor Muslims expenditure on goods and services. The poor
Muslim expenditure depends on his own income and amount of Zakah received:
DD ¼ Y c þ Z c (A2)
Yc – his own income uses for consumption;
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Zc – amount of Zakah income consumed.

DDD ¼ DY c þ DZ c
Y c ¼ a þ bY
a – savings (if any);
b – change in current income.
DY c ¼ b DY

Z c ¼ d þ eZ c

d – past year Zakah (if any);

e – change in current Zakah.
DZ c ¼ e DZ c
DDD ¼ b DY þ DeZ c (A3)
Thus, total change in demand creation depends on change in his own income and change in Zakah he
receives (b þ e).

Appendix 2. Mathematical approach to Islamic firm strategic options

For an Islamic firm, the strategy options are:
Let pa and pz, be the probabilities with which an Islamic firm selects his strategy; a =
advertising and z = socio-religious cause
As usual 0 # pi # 1 is a probability of an Islamic firm selecting his strategies (i = a, z). Thus:
X X
p
i¼z z
¼ z or p
i¼a a
¼a (A4)
For the conventional firm:
Let ka and kz, be probabilities of a conventional firm selection of strategy.
As usual 0 # kj # 1 is the probability of a conventional firm selecting his strategies (j = a, z). Thus:
X X
k
j¼z z
¼ z or k
j¼a a
¼a (A5)

Both firms attain an optimal level, where:

 X
a p
i¼z za z
U i ¼ a; z (A6) Social cause
X marketing
a k #U
j¼a za a
j ¼ a; z (A7)

U here is defined as value of the game; in equation (6), an Islamic firm-expected gain from adopting
socio-religious cause is at least as large as U when a conventional firm used its best strategy which
here is advertising. While in equation (7), loss to be incurred by conventional firm is not higher than
U. The reverse of the equations is the case where an Islamic firm is a loss-making firm. But, they can
decide to cooperate and share the market between them. Thus, U is the outcome expected when the
firms are at equilibrium (Z, X) where an Islamic firm uses socio-religious causes, whereas a
conventional firm uses advertising. Zakah here is used as a central feature of socio-religious activity
of an Islamic firm. For conventional firm “z” means social causes like caring for environment,
community development programs and donations to good causes. For mathematical treatment of the
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above type of game theory, see Henderson and Quandt (2003). Thus, the implication of game theory
analysis here is in portraying the advantage of social cause marketing and charitable activities over
other marketing communication strategies such as advertising.

About the author

Shafiu Ibrahim Abdullahi works with Sule Lamido University Kafin-Hausa, Jigawa state, Nigeria. He
previously work for Media Trust (publishers of Daily Trust) Abuja Nigeria and Intercontinental Bank
Nigeria PLC. He has a Bachelor of Economics, Masters of Business Administration and Masters of
Science Economics. He has published articles in journals, newspapers, as book chapters and in
conference proceedings, and reviews for Journal of Islamic Marketing and International Journal of
Islamic and Middle Eastern Finance and Management. His research interests are in Islamic economic
and finance, advertising, consumer theory, risk management and corporate governance. He is a
prolific writer who has won a writing award from the Nigerian Stock Exchange in 2003.
Shafiu Ibrahim Abdullahi can be contacted at: shafiuibrahim@gmail.com

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