Lectured by Dr. Sulaiman, SE.

,MM

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 Introduction- Discussion
What is ethic? (Is it right or wrong? WHY?)

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 Definitions

Ethics involves a discipline that examines good or bad

practices within the context of a moral duty
Islamic Ethics based on Quran and Sunnah
Moral conduct is behavior that is right or wrong
Business ethics include practices and behaviors that are
good or bad
Islamic Business no prohibited elements in transaction

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Introduction
Ethics is the study of our web relationships
with others (Rania, 2006).
Business ethics: is applied ethics. It is the
application of our understanding of what is
good and right to what we call business, i.e.
assortment of institutions, technologies,
transactions, activities (Velasquez, 2006).
Raymond Baumhart asked more than 100
businesspeople, “what does ethical mean to
you? and their answers were: (1) 50% what my
feeling tell me is right, (2) 25% what my
religious beliefs tell me is right, (3) 25%
others …(laws, …etc).
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Ethics is defined as what is right and wrong
(Velasquez, 2006).

The most pressing issue is: how is one to know the

right from the wrong ?

How to know the right from the wrong, good

from the bad?

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 Ethical Theories

Utilitarian Theory- Egoism Theory- Deontology Virtue Ethics Divine Relativism

greatest good for focus only on Theory (Kant’s (Aristotle's Command Theory
greatest number your self theory) theory) Theory

Consequences Duty is the basic

theories -the moral category,
right action is the and that is
one that produces independent of
the most benefit consequences

Category basis Action Character Religion Culture

What kind of What kind of Follow religious “Morally right”

actions should person should beliefs and if “specific
Meaning we perform? we be? principles society” accepts
it

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Introduction
Globalization has brought about greater involvement
with ethical considerations and most importantly
achieving competitive advantage through business
ethics.

Multinational companies need to set up ethical values

and principles that should be applied in every branch
in the world (example: Toyota?? How to deal with
bribe?)

So, what is the right thing to do ?

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Definitions- Ethics and morality
Ethics and morality lack clear distinction (Ho,
2007).

Morality: the standards that an individual or a group

has about what is right and wrong or good and evil.
(how we ought to live, and why?) (Rachels, 1993).

Ethics: the discipline that examines one’s moral

standards or the moral standards of society.
(Velasquez, 2006).

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Definitions- Ethics and morality
Some researchers define morality as rules and
standards individuals must have while ethics are
defined as a study that examines these rules and
standards (Newton, Hodges, & Keith, 2004; Rachels &
Rachels, 1993; Velasquez, 2006). In contrast, other
researchers have used these two concepts
interchangeably (Ho, 2007; Jones, 1991; Thorne, 2000;
Trevino, 1992).

To avoid confusion, we will use the term ethics and

morality interchangeably which means ethics and
morality refer to the same concept that is the good
rules and principles people must observe and follow.

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Definition of ethics and business
ethics
Ethics involves a discipline that examines
what is good or bad, right or wrong.
Islamic Ethics involves a discipline that examines what is
good or bad based on Islamic resources, i.e. Quran and
Sunnah.
Business ethics involves a discipline that examines what
is good or bad in the Business world.
Islamic Business Ethics involves a discipline that
examines what is good or bad in the Business world as
long as it’s consistent with Islamic principles, i.e. no
prohibited elements in transaction such as Riba.
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Ethics VS Morality
Ethics and Morality are different:

Ethics – a kind of investigation and includes both the activity of

investigating and the results of that investigation.
Morality is the subject matter that ethics investigates.

Ethics and values are the basis for social responsibility:

 Islamic perspectives to the issue of ethics, values, and
morality have finality to them as they are based on Allah’s
message sent through the last messenger, the Prophet
(SAW). Islam, as a religion, offers a complete and universal
and eternal code of ethics for humanity.
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Dictionary Definition:

• The principles of conduct governing an

individual or a group (e.g. personal ethics
or accounting ethics)
• “The study of morality”
• Standards of what is right and wrong, good and evil (e.g. Case
– Goodrich)

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Philosophy, concepts and principles of ethics in
Islam
Refer to Islamic resources, i.e. Quran and Sunnah.

No prohibited element such as Riba (‫ )ربا‬, Maisir (‫)ميسر‬

and Gharar(‫ )غرر‬.

Ethics is related to Iman (faith) positively.

Islamic perspective to the issue of ethics, values, and morality

have finality to them as they are based on Allah’s message sent
through the last messenger, the Prophet. Islam, as a religion,
offers a complete and universal and eternal code of ethics for
humanity.

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Philosophy, concepts and principles of ethics in
Islam
Allah describes people who attain success as those who
are inviting to all that is good (khayr‫) خير‬, enjoining what
is right (ma;ruf‫ ) معروف‬and forbidding what is wrong
(munkar‫) منكر‬.
Prophet Muhammad (PBUH) who, on the one hand, urged
his followers to adopt trade as their profession
On the other hand, exhorted them to observe truthfulness
and honesty in their business transactions.
Accordig to Imam al-Ghazali
 to adopt trade as a profession or to set up his own business
should first acquire a thorough understanding of the rules
of business transactions codified in the Islamic Shari'ah.

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Philosophy, concepts and principles of ethics in
Islam

Business should be based on the fundamental

principle of "Ta'auanu ala birri wa't-taqwa

‫تعاونوا على البر والتقوى‬ "

(mutual co-operation for the cause of goodness or
piety).

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Philosophy, concepts and principles of ethics in
Islam
Importance of fairness in business as stated in the al-
Quran:

"And, O my people, give full measure and weight justly,

and defraud not men of their things, and act not
corruptly in the land making mischief. What remains
with Allah is better for you, if you are believers" (Hud
11: 85-86).

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Philosophy, concepts and principles of ethics in
Islam
Prohibited business in Islamic way. That is
Monopoly business
Speculative business based on selfish interest.
Interest transactions.
Transactions similar (in nature) to gambling
Munabadha‫ المنابذة‬and Mulamasa‫ المالمسة‬.
Forbidden interest or in Islamic word Ribaa. In Surah
al-Baqarah:275
“ But Allah has permitted trading and forbidden
interest ( Ribaa)”

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18
Philosophy, concepts and principles of ethics in
Islam
In an Islamic context the most term most closely
related to ethics while doing business based on the
Qur’an is khuluq(‫ )خلق أو أخالق‬.
The Qur’an also uses a whole array of terms to describe
the concept that is khayr‫( خير‬goodness), birr‫بر‬
(righteousness) , qist‫( قسط‬equity), adl ‫(عدل‬equilibrium
and justice), haqq‫( حق‬truth and right), maaruf ‫معروف‬
(known and approved) and taqwa‫( تقوى‬piety).
Absolute honesty in business and commerce is really
an Islamic concept.

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Philosophy, concepts and principles of ethics in
Islam
Five axioms of Islamic ethical philosophy
1. Unity: Concept of “tawhid”‫ توحي_د‬which means the totality
of integrated existence in and outside of the Universe are
the creation of Allah.
2. Equilibrium: Concept of “adl”‫ ع_دل‬which means a sense of
balance among the various kinds of human beings.
3. Free will‫ حري_ة االختي_ار‬: The ability of human beings to act
without external force.
4. Responsibility‫ المس__ؤولية‬: The accountability of human
beings for all their actions
5. Benevolence: Concept of “Ihsan”‫ إحس_ان‬meaning an action
carried out by a human being without the expectation of
return or reward benefiting others

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Philosophy, concepts and principles of ethics in
Islam

Characteristics of Islamic ethics:

1. Comprehensive (cover all life aspects).

2. Realistic (consistent with people’s ability).

3. Moderation (cares about both this life and

hereafter but the hereafter is more

important). 21
Characteristics of Islamic ethics:

1. Comprehensive (cover all life aspects).

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Characteristics of Islamic ethics:
2. Realistic (consistent with people’s ability).

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 Characteristics of Islamic ethics:
3. Moderation (cares about both this life and

hereafter but the hereafter is more

mportant).

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 Ethics and Social responsibility
Business Ethics
The standards of conduct and moral values governing actions and decisions in the work
environment.
 Often shaped by the organization’s ethical climate.
 Social responsibility.
 Balance between what’s right and what’s profitable.

Social Responsibility
Social responsibility is a balance between what’s right and what’s
profitable.
•Management’s consideration of profit, consumer satisfaction, and societal
well-being of equal value in evaluating the firm’s performance.
•Contributions to the overall economy, job opportunities, and charitable
contributions and service.
•Three main social responsibilities: to (1) people, (2) developing the
economic, and (3) environment.

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Examples of Social Responsibilities:
1.Responsibilities to the General Public
• Public Health Issues. What to do about inherently dangerous
products such as alcohol, tobacco, vaccines, and steroids.
• Protecting the Environment. Using resources efficiently,
minimizing pollution.
• Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing quality
of the overall workforce through education and diversity
initiatives.
• Corporate Philanthropy. Cash contributions, donations of
equipment and products, and supporting the volunteer efforts
of company employees.

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2.Responsibilities to the Customer
• The Right to Be Safe. Safe operation of products,
avoiding product liability.
• The Right to Be Informed. Avoiding false or misleading
advertising and providing effective customer service.
• The Right to Choose. Ability of consumers to choose the
products and services they want.
• The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties.

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3.Responsibilities to the Employees
• Workplace Safety. Monitored by Occupational Safety and
Health Administration.
• Quality-of-Life Issues. Balancing work and family through
flexible work schedules, subsidized child care, and regulation.
• Ensuring Equal Opportunity on the Job. Providing equal
opportunities to all employees without discrimination; many
aspects regulated by law.
• Age Discrimination, i.e. regulation protects workers age 40 or
older.
• Sexual Harassment and Sexism. Avoiding unwelcome
actions of a sexual nature; equal pay for equal work without
regard to gender.

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4.Responsibilities to the Investors
• Obligation to make profits for shareholders.

• Expectation of ethical and moral behavior.

• Investors protected by regulation.

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Importance of Ethics and Responsibility in Islam

Practicing of people should seek ‘blessing’ before

‘profit’. Therefore, the ultimate goal is to achieve the

acceptance from Allah.
To get a better deal and to get off with less harm.

Prophet says: ‘May Allah have mercy on those who are

easy when they sell, easy when they buy … God loves
kindness when you deal with any matter.’
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Importance of Ethics and Responsibility in Islam

To help the community fighting the corruption in

business.

Prophet Mohammad says: ‘the one who cheats is not

one of us [the Muslims].’

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Importance of Ethics and Responsibility in Islam

The Prophet Muhammad explained the purpose of his

mission. He said: “I was sent only to perfect the moral

excellence of human beings” (Al-Gazali, 2001).

Islamic main worships (Prayer‫ صالة‬, Fasting‫ صوم‬,

Zakat‫زكاة‬, and hajj‫ ) حج‬are designed to improve and

protect ethics (al-Banna, 1940; al-Qaradawi, 1985, 1994, 32

(Prayer‫(صالة‬
Prayer refrains one from indecency and evil

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)Fasting‫( صوم‬
Fasting teaches Muslims how to live with ethical
principles and values.

The Prophet Muhammad said: “Whoever does not

give up false speech and acting upon it and does not
give up offensive speech and behavior, Allah has no
need of his giving up his food and drink”. He also
says: “Fasting does not mean abstaining from food
and drink only; rather it is also abstaining from
lying, falsehood and idle speech” (Al-Gazali, 2001). 34
)Zakat‫( زكاة‬
Zakat is taken from the rich to be given to the poor
in order to sanctify the former and clean them from
their sins.

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)Hajj‫( حج‬.
The pilgrimage (Hajj) trains Muslims to develop
characteristics like patience, endurance, and
altruism.

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Importance of Ethics and Responsibility in Islam
In Islam, the essential rule in business is honesty and
fair dealing, and a businessman should, as a result, be
a person of high ethical principles (Kaliffa, 2003). The
market should be free and not subject to
manipulation and where individuals engaging in trade
and commerce should act fairly (Lewis, 2006).
Dealing in stolen goods is forbidden (Al-Qaradawi,
1994). Advertisement is not encouraged when the
intention is to force up the price in times of scarcity
and so profit at the expense of others (Lewis, 2006).

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Examples of Ethical Issues
Ethical issues may vary from one organization to another
according to the factors influencing the Ethical Behavior:

conflicts of interest,
quality control issues,
discrimination in hiring and promotion,
misuse of proprietary information,
abuse of company expense accounts,
misuse of company assets,
drug and alcohol abuse,
environmental pollution, environmental destruction,
etc.
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Factors influencing the ethical behavior

Ethical problems may vary from one person to another

according to the factors influencing the Ethical Behavior:

 Legal Interpretations: In secular societies, legal

interpretations are based upon contemporary values and
standards according to time, country or situation.

 Organizational Factors: The organization too can affect or

influence participant’s behavior based on the degree of
commitment of the organization's leader conduct

 Individual Factors: Individuals come to work with different

values based on the personal values and morals, family
influences, peer influence and life experiences.
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Conclusion
Ethics is part of our life, we must implement it based
on our primary source Quran and Sunnah (PBUH).
Every muslims must follow Islamic ethics.
Every job have their ethics like Doctor, Engineer,
Architect, Accountant and etc.

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References
Al-Quran
Rafik Essa Beekun, Islamic Business Ethics, Herndon,
Virginia, USA: The International Institute of Islamic
Thought, 1997
Al-Hasan Al-Aidaros, Faridahwati Mohd. Shamsudin, &
Kamil Md. Idris (2013). Ethics and Ethical Theories from
an Islamic perspective. International Journal of Islamic
Thought, 4(1), 1-15.
Jamal al- Badawi. Islamic Business Ethics. Saint
Mary’s University, Halifax, N.S., Canada

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