Evidence of the Impact of Islamic Values on CSR Attitudes of Muslim Entrepreneurs in EU Member State Germany

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Evidence of the Impact of Islamic Values on

CSR Attitudes of Muslim Entrepreneurs in

EU Member State Germany

Thesis submitted to the Faculty of Economics,

University of Groningen in fulfilment of the requirements for the degree of Master of Science in International Business and Management

By:

Katharina Joecks (1754548)

Supervisor: Prof. Dr. Ir. Rienk Goodijk

Co-assessor: Dr. Bartjan J.W. Pennink

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List of tables

Table 1: Definitions of the 10 Types of Values according to Schwartz (1992)... 14

Table 2: Structure of the 10 Types of Values according to Schwartz (1992) ... 15

Table 3: Islamic core values... 20

Table 4: Comparison CSR practices EU/Germany and Islamic values ... 31

Table 5: A Short List of Universal Moral Values (Kinnier, Kernes and Dautheribes, 2000).. 59

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Abstract

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I. Introduction

Although the debate about the role business should fulfil in society is not new, in the last dec-ades, however, the question of how to do business in an ethical way gained increased impor-tance in the light of corporate and accounting scandals like Enron. The question of the ethical corporation is closely linked with its accountability towards shareholders and stakeholders The concept of corporate social responsibility (CSR) was introduced and plays a prominent role in this current debate. It was, however, developed in the Western world, influenced by “Western” values.

The purpose of this paper is to examine a CSR approach from an Islamic value-based perspec-tive which seems to be important to know for one reason: In Western Europe the number of the Muslim population has increased since 1950 from only 800,000 Muslims to today 20 mil-lion (Tibi 2007), the majority of them having a migration background. Especially in the large European cities this minority has grown to a relevant group that needs to be considered to improve future cohabitation. This affects also the business life because migrants have already been an important part of it. The study aims to show how they, as Muslims, see and exercise CSR in their companies influenced by their religious values but also by the European cultural and political context in which they live.

Islam was chosen for this study because it is the newest world religion in Europe with its ten-ets not sufficiently known and understood by a large part of the population and seen by many “problematic” as they fear an “Islamization” of Europe being a danger for the “Christian val-ues” in Europe. As statistics show that among Western European Muslims religion has a higher impact on their daily life than among the non-Muslim citizens1 and because Islam in-fluences also the business sphere of human life, the relevance of analysing CSR from an Is-lamic valued-based perspective is emphasized. If Muslim owner-managers in SMEs in the European Union are aware of these Islamic values and to which extent they could influence their CSR attitudes in practice can only be explored with the help of an empirical analysis.

1 _{According to the World Value Survey, accessed at http://www.worldvaluessurvey.org/, ‘God’ and ‘Religion’}

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Problem Statement

The debate on Islam in Europe is focused on the question of its compatibility with the Euro-pean value system as Zemni and Parker (2002) state: “…Islam has been reconstructed in the European discourse as something of an “anti-Europe:” a civilization concept diametrically opposed and potentially in conflict with that of Europe.”

For this reason and because there is a lack of empirical research in the field of CSR/business ethics and Islam (studies with mixed results: Graafland, et. al. 2006; Brammer, Williams and Zinkin, 2007), it is interesting to take a deeper insight into the Islamic value system and ex-plore an Islamic perspective of CSR based on religious values, as well as to compare if these values are compatible with CSR practices propagated by the European Union and the member state Germany, and finally to obtain empirical evidence on the impact of Islamic values on the Muslim entrepreneurs. Except for the Netherlands there is no empirical research done for other European countries with major populations’ shares of Muslims, especially in the bigger cities, such as Germany, France and the UK. However, the conditions of ‘Muslims in EU cit-ies’ is a relevant topic these days as an ongoing EUMAP study of the same title reveals. As it is not possible to analyze all EU member states within the frame of this master thesis, one country was selected for an exploratory study. The choice was made for Germany be-cause this country has a history of migration of Turkish guest workers – “Gastarbeiter” – of mostly Muslim origin who moved to Germany in the 1960s and 1970s. Since then the number of Muslims in Germany has increased up to 3.7% of the total population2. The majority of Muslims, however, live in big cities such as Berlin (5.9% of population) and Hamburg (6.4%), the wide majority of them with Turkish background3. The research question is there-fore:

“What is the impact of Islamic values on Muslim entrepreneurs’ CSR attitudes in a European country such as Germany?”

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Structure of the paper

The paper is structured into three main parts, the introduction, a literature review and an em-pirical analysis.

Part two, the literature review consists of five chapters. In the first chapter it is important to provide an explanation of the conventional concept of corporate social responsibility and un-derlying theoretical foundations. A critical evaluation of the status of research in the CSR field leads to the research question. The second chapter offers the theoretical underpinning of the research question. By drawing on the literature of business ethics, in particular ethical decision making and ethical business behaviour a model is provided which tries to explain the factors which influence individuals in their business behaviour, religion being one of them. Furthermore, religion is described here as a moral system, a set of values and concepts which directly influence business behaviour. The theoretical foundation for the relation between values and religion as well as CSR is provided in this chapter. The third chapter describes an Islamic perspective of CSR based on Islamic values and concepts as they can be derived from religious sources. It also gives an overview of empirical research done in this field. In the

fourth chapter the European and German context regarding CSR is taken into account by

providing insight on the state of CSR among SMEs in Germany specifically and by compar-ing CSR practices promoted by the EU and Germany to the Islamic value system. In the fifth

chapter a conceptual model for the research is developed. This model displays the

relation-ship between Islamic values and the CSR attitudes of Muslim owner-managers in small and medium-sized businesses in Germany. The chapter also establishes sub-questions of the re-search question are answered in the empirical analysis.

Part three, the empirical analysis investigates Muslim owner-managers personal attitudes towards CSR in Germany and related activities in their company. In the first chapter the data and methodology used are described. The second chapter presents the results of the study. The data are then discussed in the third chapter with reference to previous studies and aca-demic literature, and limitation of this research as well as implications for further research are presented.

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II. Literature review

1. Theoretical foundations of CSR

Concepts and theories of Corporate Social Responsibility

Before exploring a perspective of Corporate Social Responsibility based on Islamic values, it seems necessary to give a definition of the term, a theoretical framework for Corporate Social Responsibility how it is described in recent academic literature. As manifold theories and ap-proaches of CSR exist, an overview of recently discussed theories is provided.

Terminology problems

The first problem consists in choosing the correct terminology. The responsibility of compa-nies in the society has been discussed for over half a century now; however, different termi-nology has been used. Garriga and Melé (2004:51) mentioned only some terms that were used to describe CSR: “Society and business, social issues management, public policy and busi-ness, stakeholder management, corporate accountability […]” According to the authors, alter-native concepts were developed recently, such as corporate citizenship and corporate sustain-ability. That these alternative concepts overlap with the classical CSR approach in meaning can be understood. However, Garriga and Melé (2004: 51) point to a bigger problem that “some theories combine different approaches and use the same terminology with different meanings”.

CSR theories

Garriga and Melé (2004) classified CSR theories into four groups assuming that the most im-portant CSR theories would emphasize one of the following aspects of social reality: econom-ics, politeconom-ics, social integration and ethics.

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perform-searchers “from explicitly normative and ethics-oriented studies to implicitly normative and performance-oriented studies” (Lee 2008: 54). The dominant themes of CSR publications varied during the five decades, starting with the work by Bowen (1953) about ethics and so-cial obligation of business, the enlightened self-interest in the 1970s, the development of a corporate social performance model in the 1980s towards the stakeholder approach and stra-tegic management in the 1990s (Lee 2008: 58).

Stakeholder perspective

The importance of the stakeholder perspective in the CSR discussion is emphasized by Branco and Rodrigues (2007). The authors compare two views of CSR: the classical view and the stakeholder view. Whereas the classical view considers only the profit of the shareholders as relevant, the stakeholder view claims that the company has a social responsibility for all stakeholders, it “requires them to consider the interests of all parties affected by their actions” (Branco and Rodrigues 2007: 6). According to the authors, the classical view, based on neo-classical economic theory, uses three arguments to justify its focus on shareholder profit: shareholders have the ownership and therefore the power of decision how to use the resources to achieve profits; wealth production is the purpose of the company and resource allocation for social goals may have an adverse effect on the performance; and companies are not obliged and equipped for CSR actions as this is the responsibility of other organizations, such as the government (Branco and Rodrigues 2007: 7).

Definition of stakeholders

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by Mitchell et. al (1997): power to influence the company, legitimacy of the relationship with the company and urgency of the claim on the company.

What makes the difference between stakeholder theory and “enlighted value maximation”4 according to Jensen (2001) is the moral dimension, the separation of ethics and economics in the second case. Porter and Kramer (2002: 59), however, argue that such a separation is not possible because “companies do not function in isolation from the societies in which they operate”. The dependence of the companies on their environment, e.g. the consumers who buy their products and the suppliers who deliver goods to them, results therefore in social respon-sibility, be stakeholder considered as a “means” (instrumental approach to stakeholder theory) or as the “end” (normative approach) (Branco and Rodrigues 2007).

Definition of CSR

To give an explanation of what CSR actually is, Carroll (1979, 1991 in: Branco and Rodri-gues 2007) proposed that CSR contained four categories of social responsibilities: economic, legal, ethical and discretionary (or philantrophic). Relating to these categories, Lantos (2002: in Branco and Rodrigues 2007) classifies three types of CSR: ethical CSR, altruistic CSR and strategic CSR. Branco and Rodrigues 2007 argue that the focus of CSR discussion has been, however, almost merely on the ethical and philanthropic responsibilities.

Having presented an overview of CSR theories, to select the definition of CSR that shall be referred to in the further course, a pragmatic approach was taken. This is reasonable as the concept of CSR needs to be operationalized for the empirical study, the results being de-scribed in the third part of the paper. The stakeholder view is implemented in the definition of the European Commission describing CSR as "A concept whereby companies integrate

so-cial and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis."5 This definition makes clear that CSR refers to

ac-tions that take place within the daily business context or in a strategic context, that CSR prac-tices are voluntary and concern personal stakeholders as well as the environment - all units affected by the company’s actions.

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Motivations for CSR

Having described different perspectives on the responsibility of companies in the society and a definition of what CSR is, it is also relevant to analyse the motives for CSR. Three motiva-tions for CSR are proposed by Maignan and Ralston (2002, in: Branco and Rodrigues 2007:13) – utilitarian approach, negative duty and positive duty. The reasons for engaging in CSR are of strategic nature in the first two perspectives where in the utilitarian approach “CSR can be viewed as an additional instrument used by companies to achieve corporate ob-jectives” and in the negative duty view CSR constitutes “mainly a legitimacy instrument used by a company to demonstrate its adherence to such [stakeholders] norms and expectations” (Maignan and Ralston, 2002, in: Branco and Rodrigues 2007:13). Only the positive duty ap-proach involves independent self-motivation for engaging in CSR actions (Ibid).

Evaluation of CSR research

Whereas different shapes and extensions of CSR exist, the basic concept itself is criticized by Freeman and Liedtka (1991) who argue for an abandonment of the concept because it does not include, among others, religion and culture. Instead they suggest leading a discussion of reconceptualization: to consider the corporation as “a network of relationships” (stakeholder proposition), where “caring” is important (caring proposition) and “new forms of economic and social life” can be created (pragmatist proposition) (Freeman and Liedtka 1991:92). The authors share a “common-sensitive” vision of capitalism where “good society is concerned with more than the accumulation of wealth by a privileged group”. Furthermore, they suggest seeing a corporation not as a “command and control” system, and rather considering employ-ees as “complex human beings who have hopes and dreams” which can be realized by corpo-rations (Freeman and Liedtka 1991: 94). The authors also criticize the subordination of CSR into corporate strategies because they think that a separation of economic and social goals is not possible.

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Lee (2008) criticized the current state of CSR research of not sufficiently considering interna-tional aspects as well as the analysis of personal factors which influence managers’ decisions concerning CSR.

The above examples show that there is still a lack of research on specific CSR concepts ac-cording to individual characteristics such religious and cultural values. For this reason, the present master thesis intends to contribute to the conceptual debate on CSR because it aims to present a CSR perspective based on Islamic values and examine the applicability of such a perspective in a European, i.e. German, context under the research question: “What is the

impact of Islamic values on Muslim entrepreneurs’ CSR attitudes in a European country such as Germany?”

2. Religious values as determinants of CSR attitudes

Whereas the preceding chapter focused on CSR discussion as it can be found in the academic literature, the following chapter provides information on religious values as determinants for socially responsible business behaviour among individual entrepreneurs.

Model for understanding ethical behaviour in business

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Religion as a factor determining CSR attitudes

The relation between religiousness and business students’ CSR orientation was studied by Angelidis and Ibrahim (2004). The results suggested that a relationship between the degree of religiousness and attitudes toward the economic and ethical components of CSR exists. Also O’Fallon and Butterfield (2005: 392) found in their review of 14 articles studying the rela-tionship between religion and ethical decision-making from 1996 - 2003 that 9 out of the total 14 findings suggested a positive relationship.

Having indicated that a relationship between religion/religiousness and Corporate Social Re-sponsibility/ ethical decision making exists, it needs to be clarified how religion can be opera-tionalized or what is meant by the term religion. This will present the theoretical foundation for the operationalization of the Islamic religion in the empirical study of this master thesis.

Religion and values

Lau (1989:137-138) provided an explanation for the relation between religion and values: “Religion has long been regarded by social scientists as a significant variable in predicting individual differences. But what is the source of these differences? Could it be due to some particular outlook of life, or mental structure and schema, in the religious person? Findings in the literature seem to suggest so. Religion is a way of life. It provides the believer with a set of standards and principles upon which actions and thinking are guided and judged”. The rela-tion between religion and values has been analyzed by philosophers, sociologists and political theorists (Schwartz and Huismans, 1995). In particular, in the field of psychology, values and their association with religiosity as well as value priorities in religions were studied during the last two decades (e.g. Schwartz and Huismans, 1995; Roccas and Schwartz, 1997).

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Different attempts were undertaken by scholars to develop a typology of values, such as Scott (1965) who developed a classification of 12 personal values and Rokeach (1973) who distin-guished values into terminal (‘end state of existence’) and instrumental (‘modes of conduct’) values. Employing these classifications, Lau (1989) tried to find out which values religious individuals (Protestant and Catholic Christians) would prefer the most and the least in com-parison with non-religious individuals. The results of the study showed extensive differences: Religious individuals preferred moral and relational values and were less interested in per-sonal-extrinsic, competency, and egoistic values than non-religious individuals.

After past research focused only on single values, Schwartz (1992, 1994) was the first to de-velop an integrative framework that could be used for investigating the relation between val-ues and religiosity. According to Roccas (2005:748): “Schwartz’s value theory represents an important advance because it organized a multitude of separate values into a limited set of value types that are universally recognized across different cultures and religious groups”. Expressing 10 particular motivational goals, Schwartz’ integrative framework includes the following types of values: power, achievement, hedonism, stimulation, self-direction, uni-versalism, benevolence, tradition, conformity, and security. These motivational goals can be classified into four higher dimensions which form a dynamic structure of relations among values (Schwartz, 1992) which basically includes two conflicts: enhancement versus self-transcendence, and openness to change versus conservatism. It can be added that this is also a conflict between individualistic versus collectivistic values because values in the dimensions self-enhancement and openness to change serve individual interests while the remaining val-ues serve collective interests (Schwartz, 1990).

POWER Social status and prestige, control or dominance over people and resources.

ACHIEVEMENT Personal success through demonstrating competence according to social standards.

HEDONISM Pleasure and sensuous gratification for oneself. STIMULATION Excitement, novelty, and challenge in life.

SELF-DIRECTION Independent thought and action - choosing, creating, exploring. UNIVERSALISM Understanding, appreciation, tolerance, and protection for the

welfare of all people and for nature.

BENEVOLENCE Preservation and enhancement of the welfare of people with whom one is in frequent personal contact.

TRADITION Respect, commitment, and acceptance of the customs and ideas that traditional culture or religion provide.

CONFORMITY Restraint of actions, inclinations, and impulses likely to upset or harm others and violate social expectations or norms.

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Self-Direction Universalism Stimulation Benevolence SELF TRANSCEN-DENCE OPENNESS TO CHANGE Hedonism Conformity Achievement Tradition SELF ENHAN-CEMENT Power Security CONSERVATION Table 2: Structure of the 10 Types of Values according to Schwartz (1992)

Schwartz and Huismans (1995) were the first to analyze the relation between values and re-ligiosity within this framework. In their study of value priorities of four different religious groups (Jews, Roman Catholics, Calivinist Protestants and Greek Orthodox), they found their proposition confirmed that “religiosity associates values that enhance transcendence, preserve the social order, and protect individuals against uncertainty, and negatively with values that emphasized self-indulgence and favour intellectual or emotional openness to change” (Schwartz and Huismans, 1995:88).

Values and CSR

The relation between values and Corporate Social Responsibility has only received little at-tention by scholars until now. No empirical studies could be found in this field.

Hemingway (2005:233) considered values as a motivator for social entrepreneurship. She proposed that “CSR isn’t solely driven by economics and that it may also be championed as a result of a personal morality, inspired by employees’ own socially oriented personal values”. The author proposed a conceptual framework distinguishing individuals according to their individualistic or collectivist personal values and a working environment either supportive or unsupportive of CSR into four types of entrepreneurs: ‘Active’, ‘Frustrated’, ‘Conformists’ and ‘Apathetics’.

However, sparse empirical evidence on the link to values can be found in the academic litera-ture on business ethics and ethical decision making as well as concerning environmental atti-tudes. Fritzsche and Oz (2007) were the first scientists – according to the authors – who ex-amined the relationship between personal values and the ethical dimension on decision mak-ing. In their study investigating how personal values related to ethical dilemmas they used an extended version of the value scale developed by Schwartz (1992). They found that altruistic

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examined which values of the Schwartz Value Survey would be most important in ethical consumer decision making suggested universalism values with their focus on social issues as most important.

As one of the CSR-stakeholders is the natural environment, two studies relating values to en-vironmental attitudes are presented. Biel and Nilsson (2005), who investigated the relation between religious Christian values and environmental concern, came to mixed findings. They argued that situational cues could be important in determining which religious values would impact the environmental attitudes. Furthermore, the authors pointed out that the mental

ac-cessibility, awareness and activitation of values would play a role in achieving

value-congruent behaviour. Hansla, Gamble, Juliusson and Gärling (2008) found that attitude to-wards green electricity was related, among others, to self-transcendent value types. This con-firmed previous findings of pro-environmental attitudes and behaviours to be “positively re-lated to an altruistic or self-transcendence (ST) value orientation, while negatively rere-lated to an opposite egoistic or self-enhancement (SE) value orientation” (Nordlund and Garvill, 2002; Stern and Dietz, 1994; Stern et. al., 1998, cited by Hansla et. al. 2008:769). The authors emphasized the role of the ‘awareness-of-consequences belief’ in forming an attitude. So would a person with self-transcendence value orientation be aware of the positive conse-quences for all humans and nature (e.g. improvement of conditions), while a person of the second group would consider the negative individual consequences (e.g. costs).

3. Perspective of CSR based on Islamic values

During the last few years, academic literature has been exploring how Corporate Social Re-sponsibility and business ethics can be seen in an Islamic perspective (Angelidis and Ibrahim, 2004; Beekun and Badawi, 2005; Brammer, et. al., 2007; Graafland et al., 2006; Mohammed, 2007; Parvez and Ahmed, 2004; Williams and Zinkin, 2005; Williams, 2006; Zinkin, 2007). Empirical research in this field, however, is still in its infancy.

Why an Islamic perspective of CSR?

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(2003) described other reasons that clarify why it is important to examine the role of business ethics in Islam: the idea that according to Qutb (1997) the Islamic religion is misunderstood; the large number of adherents amounting to one-fifth of the world’s total population and among them business men; Muslims being the majority in more than 50 countries and among them some controlling the global oil market; according to Saeed, Ahmed and Mukhtar (2001) the ‘Islamization’ by some countries such as Egypt, Sudan, Algeria, Iran and Indonesia; the events of 11 September 2001 causing an enormous interest in understanding the tenets of Is-lam; and as a last reason he mentions that “the irresistible phenomenon of globalization makes it imperative to understand the diversity of all sorts, including religion and culture” (Uddin, 2003:23). The last point can especially be used as a reason for the present study because glob-alization and thereby migration can be seen as a cause for the increased importance of Islam in Europe during the last decades. Finally, Wilson (2006) emphasized the importance for mul-tinational companies to acquire knowledge about the beliefs of Muslim stakeholders such as clients, suppliers and employees in order to become more successful in the Islamic world.

Introduction to the Islamic religion

Islam is one of the Abrahamic religions, which are connected through the belief in only one God, and the second biggest religion in the world. Founded by the Prophet Muhammad6 in 7th century Arabic, Islam is considered by the believers a completion of Divine revelations attrib-uted to earlier prophets with Muhammad being the last prophet. A Muslim is an adherent to this religion who – according to the Arabic term – submits to the will of Allah who is seen as the only God, the “creator, sustainer, and restorer of the world”.7 There are five pillars form-ing the framework of worship: the declaration of faith, the performance of five daily prayers, the observance of fasting in the month Ramadan, the payment of a fixed proportion of wealth and earnings to the poor (Zakah), and the pilgrimage to Makkah (Hajj) for those Muslims physically and financially able to perform it (Uddin, 2003).

6_{“Peace be upon him” - the phrase may please be added by a Muslim reader here and on the following page.}

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The role of business in Islam

“Allah has made business lawful for you”

(Qur’an, Sura Al Baqarah-2:275)

According to Uddin (2003:26) business is considered in Islam not only “an acceptable pursuit, but also a dignified activity”. The founder of Islam, Muhammad, was a merchant himself be-fore becoming a prophet, and also his first wife, Khadija, was a rich business woman. Islam also approves of the market system, the main issue being to regulate it to prevent fraud and the exploitation of monopoly power (Uddin, 2003). Business activities are encouraged be-cause they enable people to earn a living, provide for their families and give charity to poor people. However, business should not lead to negligence of religious duties, and money should not become their main priority. Islam gives also importance to work and production, and serves as a source for property and contract law (Lewis, 2006). Business and trade activi-ties are regulated in an ethical framework which is laid down in Islam’s religious sources.

The Islamic sources of business ethics

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Importance of Social Responsibility in the Islamic teachings

“Have you seen him who denies the Day of Judgement? It is he who pushes the orphan away, and does not induce others to feed the needy” (Qur’an, Sura Al Ma’un- 107:1-3) The concept of social responsibility is deeply anchored in Islamic teachings. Mohammed (2007) explains why social balance is essential for an Islamic society: “The goal of an Islamic social system is based on falah (human well-being) and hayat tayyibah (good life), both of which stress brotherhood and socio-economic justice, as well as a balance between the mate-rial and spiritual requirements of all human being that is necessary to preserve and enrich faith, life intellect, posterity and wealth” (2007:55).

According to Zinkin and Williams (2006) social responsibility in Islam is emphasized since a Muslim has two missions to fulfil in his life; the first being to serve God, the second is to be a steward or vicegerent of God and therefore being accountable for the treatment of God’s crea-tion. As the term ‘creation’ relates not only to other humans, but also to the society at large, the environment and nature, it can be understood how the Islamic concept of social responsi-bility is connected with the goals of CSR (Zinkin and Williams, 2006).

In order to further understand this issue, light should be shed on the concept of ‘accountabil-ity’ towards God described by Lewis (2006:2) as an obligation of every Muslim for all actions and their trusteeship of resources given by God. According to Islam, this ‘account’ will be assessed by God on the Day of Judgement, a Muslim’s performance in this life having there-fore an impact beyond his death on his life in the hereafter.

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Islamic values relevant for business ethics and CSR

“Say ‘Indeed, my Lord has guided me to a straight path – a religion – a set of values”

(Qur’an 5:161)

Mohammed (2007:63) states “Morality that reflects social responsibility and justice is the foundation of an Islamic society”. Therefore, it is necessary to examine the moral or ethical system in Islam as it is expressed in the Islamic values. The question about which values can be identified as Islamic core values, also called basic tenets (Uddin 2003), had been investi-gated by several scholars within a business and management perspective.

Reference Identified Islamic core values

Khayat (2003) Value concepts: freedom (free will), recognition of the other (parity and

equality) – subordinate values: being open to others, admission of differences; justice (equality); knowledge; gracefulness (ihsan) – subordinated values per-fection and civilized behaviour (sadaqah)

Rice (1999) Ethical principles: unity (tawhid), justice (adalah), trusteeship (khilafah), the

need for balance Beekun and

Badawi (2005

Four elements form the ethical system in Islam: justice (‘adl), balance

(quist), trust (amanah), benevolence + excellence (ihsaan)

Uddin (2003) Basic tenets of the Islamic socio-economic system: unity, justice, productive

work, freedom, trusteeship

Lewis (2006) Framework for a just business and commercial system:

Halal - (allowed and praiseworthy):

tawhid (oneness and unity of God), ihsan (goodness, kindness par excellence), tawakkal (trust in God), iqtisad (moderation), adl (justice), amanah (honesty), infaq (spending to meet social obligations), sabr (patience), istislah (public interest)

Haram - (prohibited and blameworthy):

riba (interest), ihtikaar (hoarding), zulm (tyranny), bukhl (miserliness), hirs (greed), iktinaz (hoarding of wealth), israf (extravagance)

Mohammed

(2007:75) Islamic Tenets of Business Transactions: Halal Business Transactions:

Keenness to earn Legitimate (Halal) Earnings; Trade through Mutual Con-sent; Truthfulness; Generosity and Leniency; Trustworthiness; Honouring and fulfilling Obligations (Uqud); Fair Treatment of Workers

Haram Business Transactions:

Interest (Riba); Dealing in Prohibited (Haram) Items; Sale of Al-Gharar (Un-certainty, Risks, Speculation); Arbitrarily Fixing the Prices; Hoarding of Foodstuff; Exploitation of one’s Ignorance of Market Conditions; Cheating and Fraud

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Position of Islamic values within the value system by Schwartz (1992)

When Islamic values, as they have been described above, are compared to the values derived from the Schwartz Value Survey (1992), as presented in Chapter 2, it can be found that the majority of Islamic values fall into the ‘Self-transcendence’ section consisting of ‘Universal-ism’ and ‘Benevolence’ values, and a minor part is characterised as ‘Conservation’ values.

Self-Direction

Freedom (Free will)

Universalism

Justice, Equality, Stew-ardship, Balance, Peace,

Benevolence, Unity (Tawhid), [Accountabil-ity, Knowledge] Stimulation Benevolence Honesty, Reliability (Promise-Keeping), Re-sponsibility, Forgiveness, [Mercy, Compassion, Kindness, Patience, Shura-Consultation] SELF TRANSCEN-DENCE OPENNESS TO CHANGE Hedonism Conformity

Politeness, Struggle to-wards self-improvement

Achievement

Excellence Humility, Moderation Tradition

SELF ENHAN-CEMENT

Power Security [Modesty]

CONSERVATION

Figure 1: Integration of Islamic values into the model of the Schwartz Value Survey (1992)

An Islamic CSR model

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Based on the concepts of trusteeship and work (as an act of worship) Beekun and Badawi (2005) develop an ethical system around the values of justice (‘adl), balance (qist), trust (amanah), as well as benevolence and excellence (ihsaan). The company’s interactions with its stakeholders are described in detail by the authors (Beekun and Badawi, 2005: 135-143) and, taking their article as the source, they shall be outlined in the following paragraphs. The managers of a company, representing the shareholders, should ensure that the company’s activities are halal (e.g. no production of alcoholic drinks) and transparent, and that the ethical principles for daily business operations are adhered to. Due to the principle of riba, predeter-mined interest payments on the shareholder’s money capital are prohibited to encourage risk sharing between stakeholders.

Employees should be treated with fairness and gender equality, and selected according to

competence. Workers should not be exploited but offered good working conditions and fair wages, with an emphasis on wage equity in respect to both employer and employee. In Islam, the exploitation of children and their deprivation of the right of education cannot be justified. Employers are further held to respect their employees’ rights to privacy and freedom of relig-ion, including consequences on performance and life during working time. On the side of the employee, hard work instead of misusing charity is emphasized, as well as honesty, secrecy and trusteeship of the employer’s resources.

The interaction with suppliers and buyers is based on the same principles. Actions that disturb the free market system, such as hoarding and price manipulation, and the establishment of monopolies, are prevented, as well as fraud and the selling of products not being halal or with hidden defects. Deceiving the buyer, price manipulation, bribery, and selling products of doubtful delivery are also prohibited according to Islam. To avoid misunderstandings, con-tracts with suppliers should be made in written and be fulfilled by the parties.

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Mohammed (2007) was the first scholar who undertook the effort to develop a conceptual framework of CSR in Islam. The foundation of the model are the four axioms or core values ‘unity’, ‘equilibrium’, ‘free will’ and ‘responsibility’ identified by Naqvi (1981) which form together with the four principles of an Islamic ethical system (‘trustee’, ‘freedom of choice’, ‘distributive justice’, and ‘accountability’) and the codes of moral behaviour (halal vs. haram; see Table 1) the ‘Tenets of Business Transactions in Islam’ Mohammed (2007:150).

The four axioms identified by Naqvi (1981) represent the unique view of Islam, with ‘unity’ (tawhid) as the vertical dimension of Islam, for the belief in one God, the unity of all mankind in submission to God, and unity in a timely sense as seen in the unity of work and worship. The concept can be applied to business as a believer “will be trustworthy and truthful in busi-ness transactions; will not discriminate in any form; and will not hoard his wealth avari-ciously” (Mohammed 2007: 148). The concept of ‘equilibrium’ (al ‘adl) relates to a balanced and therefore best social order, as the horizontal dimension of Islam. In a business context, it refers to fairness in the treatment of stakeholders and fair competition. The third axiom is the

‘free will’ (ikhtiyar) as the individual freedom of choice to follow the codes of moral

behav-iour or not. According to Mohammed (2007:148), a Muslim “is expected to fulfil all obliga-tions; contribute to the well being of the society; and most important - be benevolent (God-like) - need to watch over the welfare of weak and destitute members of the society”. The last concept of the model is the ‘responsibility’ (fardh) of one’s actions towards God, oneself and the society at large (Mohammed, 2007).

Tenets of Business Transactions in Islam Halal

(Lawful) The Islamic Ethical System

Haram (Unlawful)

Legitimate

Earning Trustee The Four Axioms (Core Values) Interest (riba) Fair Treatment Unity Equilibrium

Distributive Justice Dealing in Prohibited Items Generosity Freedom of Choice

Free Will Responsibility Accountability Fixing Price

Fulfilling

Obligations Hoarding

Truthfulness

Trustworthiness Mutual Consent Sale of Uncer-_tainty Cheating & _Fraud

Exploitation

Figure 2: Conceptual Framework of Corporate Social Responsibility in Islam (Mohammed 2007: 150)

State of empirical research in this field

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framework, the ideal models, in a real business environment (Uddin, 2003; Beekun and Badawi, 2005). However, until recently, only a few empirical studies have been undertaken in this field – as far as the English speaking academic literature concerns. Research in other lan-guages widely spoken in Muslim majority countries such as Arabic, Indonesian or Urdu could not be accessed and taken into account. Empirical studies could be found investigating atti-tudes towards CSR or socially responsible business conduct of Muslim entrepreneurs in the Netherlands (Graafland et. al., 2006), Islamic banks (Mohammed, 2007), Muslim CEOs in the United Arab Emirates (Katsioloudes and Brodtkorb, 2007), Muslim managers in Turkey (Arslan, 2001), Muslim consumers of Islamic banks in Malaysia (Dusuki and Abdullah, 2007), Muslim consumers in Muslim as well as non-Muslim countries (Williams and Zinkin, 2006) and other individuals in a cross-country study (Brammer et. al., 2007). In addition, re-search on ethical decision making of Muslims – Egyptian executives (Beekun, Hamdy, Westerman and HassabElnaby, 2008) can be named here.

None of the studies tried to explicitly link Islamic values to CSR attitudes. Zinkin and Wil-liams (2006) compared the tenets of Islam with the ‘Ten Principles’ of responsible business outlined in the UN Global Compact and found no divergence with the “possible exception of Islam’s focus on personal responsibility and the non-recognition of the corporation as a legal person which could undermine the concept of corporate responsibility” (Zinkin and Williams, 2006:1). In a second, empirical study on CSR and Islam (Williams and Zinkin, 2006) the au-thors experienced a paradox: In their study of nearly 20,000 observations across 21 countries Williams and Zinkin found that Muslim consumer stakeholders were less concerned about CSR then non-Muslims consumers. However, according to the authors, these differences did not appear to be explained by demographics, socio-political factors or cultural differences. An explanation they saw in the importance of individual responsibility in Islam from which they concluded that it replaced the CSR concept and “it might be that Muslims do not look to com-panies to act in a responsible way but rather to the individuals who make up the company.” (Williams and Zinkin 2006:30).

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Dutch concept of Social Responsible Business Conduct (SRBC) between the Muslim group of entrepreneurs and the non-Muslim group. Although they both shared a positive view of SRBC the Muslim entrepreneurs achieved a worse score for the contribution in their companies. That, however, more empirical research is necessary to understand the status of CSR and business ethics in Muslim owned/managed companies, suggests another study by Arslan (2001) who surveyed 277 Protestant, Catholic and Muslim managers with the purpose to in-vestigate a possible impact of religious denomination on an individual’s work ethic. The re-sult showed Muslims had the highest Protestant Ethic level of all religious groups.

4. CSR in the European and German context

In order to analyze whether a CSR perspective based on Islamic values can be compatible with the view promoted by the European Union and specifically the member state Germany, an overview of the current situation of public CSR policies as well as the implementation in SMEs in Germany is presented in this chapter. As this paper focuses on Muslim owner-managers of small- and medium-sized companies, this shall be considered when describing the policies and the current situation concerning CSR practices.

The EU and German policies on CSR are also Western approaches and can therefore be ex-pected to be similar to the Dutch concept of social responsible business conduct (SRBC) tested in a study about Islamic entrepreneurs in the Netherlands (Graafland et. al. 2006) and the ‘Ten Principles’ of responsible business outlined in the UN Global Compact which was compared to an Islamic perspective on CSR in a study by Zinkin and Williams (2006). Both studies found no divergence between the Western and the Islamic approach. In addition, a comparison between Qur’anic teachings and the Caux Round Table’s Principles for Business which incorporates “concepts of social responsibility from the United States, “kyosei” from Japan, and human dignity from Europe in an attempt to fashion for business ethical principles with worldwide applicability” (p. 41) clearly showed compatibility.

CSR in the European Union

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pol-icy. Furthermore, it should be noticed that the intensification of discussions about CSR on the European level were the driver for the beginning of this development in Germany.

As mentioned before, according to the European Commission (EC), CSR is: "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis." 8 The CSR concept is further explained on the European Commission’s CSR website as covering not only social but also environmental issues. In addition, the importance of integrating these social and environmental concerns into business strategy and operation is emphasized as well as the voluntary aspect of CSR. Furthermore, a company’s stakeholders are described as “internal and external stakeholders (employees, customers, neighbours, non-governmental organisa-tions, public authorities, etc.)”.9

Although the definition of CSR does not reveal the underlying motivation of CSR practice, it becomes clear that the European Commission follows a rather instrumental approach seeing CSR as a means for companies to excel in competition as the Competitiveness Report 2008 linking CSR to competitiveness and a statement of Vice-President Verheugen, Commissioner for Enterprise and Industry, shows: “I am convinced that the tomorrow’s marketplace will

reward the ability of enterprises to understand and meet the expectations of society, beyond

simply complying with regulation and meeting consumer demand in the narrow sense of the term. Successful companies, large and small, will be those that will have risen to the challenge of integrating CSR into their business strategy and purpose.”10 (emphasis by the author)

The history of CSR in the European Union started in 1993 with an appeal by EC President Jacques Delors to companies to address social problems in Europe, one of them being social exclusion. It took, however, nine years until the European Commission would release its First European Commission Communication on CSR in 2002 which established, among other things, a definition of CSR. Since then the EU’s policy on CSR has been developed and many activities and projects were implemented, e.g. the foundation of a European Academy of Business in Society, the European Multi-Stakeholder Forum on CSR, the European MarketPlace on CSR, and the European Alliance for CSR.11

8_{http://ec.europa.eu/enterprise/csr/index_en.htm}

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The European Commission supports also SMEs to integrate CSR or ‘responsible entrepreneurship’ into their business through EU-funded projects and the provision of a CSR Toolkit and good practice examples on the EC Enterprise and Industry website.12

Having outlined the relevance of CSR as a policy at the EU level, in order to understand how the EC’s approach to CSR for SMEs in detail corresponds to Islamic values, if a value-conflict becomes visible or not, a comparison shall be made later on (see page 29).

CSR in Germany

Engagement for the society is widely seen in German companies; however, there is a focus on the traditional donations and sponsoring for culture, sports and social activities. Corporate Social Responsibility or Corporate Citizenship as a term came from the US to Germany in the mid 1990s (Herbote and Bartz, 2003).

Concerning CSR two issues should be considered: the public policy of Germany, including the country’s strategy, actors and instruments to promote CSR. On the other hand, it is also important to look at the state of implementation of CSR among companies, in particular SMEs in Germany. Last but not least, an overview of proposed CSR measures for different stakeholders aiming at German SMEs is provided.

According to the CSR Navigator for 2007 which analyses public policies for CSR in Africa, the Americas, Asia and Europe “CSR is only slowly becoming a policy concern in Germany” (CSR Navigator: 70). Although social activities were practised for a long time, particularly in SMEs, CSR became a public issue first when its discussion on the EU level intensified.

Specific for the situation of CSR in Germany is the strong legal regulation in particular in CSR-relevant areas such as environment protection, labour and trade. For this reason, the German government focuses on other instruments to supplement the laws: partnerships and alliances with business and the promotion of CSR on the basis of the OECD Guidelines and the Global Compact. The density of regulations leaves less room for voluntary business ac-tivities in Germany than in other less-regulated countries.

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The report criticizes that there is no coherent strategy as well as a clear leadership for a public CSR policy. Also the lack of efforts “to increase awareness and communication of CSR and evaluate current public policy in this area” was emphasized (CSR Navigator: 71). The rela-tionship between economy, society and government can be characterised as a strong “culture of associations” (CSR Navigator: 73) with highly formalized cooperation structures. Concern-ing labour relations, trade unions play a major role. Charitable organisations are an important part of the social security system in Germany, and there are many environmental groups form-ing the NGO scene in Germany.

The development of public CSR policy is not so much advanced in Germany, the reason be-ing mainly that the term itself is not so widely known as in English-speakbe-ing countries and because the companies themselves are the most important drivers for CSR; the government considers CSR still “primarily as a management concept than an innovative contribution to solving problems in society” (CSR Navigator: 74). The government shares the EU’s instru-mental approach and understands the purpose of CSR first “as a part of European policy on competition, then as a component of economic and social policy, and finally as a concept for sustainable development at the corporate level” (CSR Navigator: 74). The report states that up to 2007 the main areas the government had developed CSR approaches were labour and train-ing, compatibility of work and family as well as promotion of responsible corporate behaviour on the international level; but no clear goals or a national CSR strategy had been defined. The influence on CSR policy of nonstate actors is high, the main drivers of CSR in Germany being the companies. In particular, small- and medium-sized companies which make up 90% of the German economy, have a long tradition of social responsibility activities, e.g. tradi-tional patronage and sponsorship, especially in the arts, culture and sports. Another nonstate actor are business associations such as the network CSR Germany, the national platform ecosense and the German Global Compact network which play an important role in the pro-motion of CSR. The report criticizes, however, that the OECD Guidelines are still little known in Germany, the promotion efforts of the National Contact Point not being sufficient. Concerning SMEs, the situation is similar for the Global Compact principles; although the German network is growing steadily, the members are mainly large corporations (CSR Navi-gator).

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lack-explicit campaigns or events took place to raise a general CSR awareness among companies and the stakeholders, except for a “Fair feels good” information campaign raising awareness for fair-trade products in Germany and a campaign promoting the EMAS (Eco-Management and Audit Scheme).

Having described the current state of CSR policy development in Germany, the next step is to look at the implementation of CSR. As the object of analysis of this paper are owner-managers of small- and medium-sized businesses, the following descriptions focus only on this group of companies, leaving large corporations aside. Two recent surveys analyzed the state of implementation of CSR among SMEs in Germany (GILDE 2007; DIHK 2005). The following issues were analyzed: the areas of commitment according to different stakeholders (employees, environment, and society), motives, benefits and obstacles for CSR engagement, the relevance of stakeholders, and the future of CSR and CSR communication.

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CSR practices promoted in EU/Germany compared to CSR-related Islamic values

Recommended CSR practices for

SMEs EU D Islam Value(s)

Employee training x x x Knowledge

Anti-discrimination (foreign,

dis-abled employees, women) x x x Equality

Consultation with employees x x Shura (Consultation)

Health, safety and welfare

ar-rangements for employees x x Protection of human life

Good work-life balance x

Compatibility of work/family x x Balance

Profit-sharing or employee

share-holding x x Justice

Social standards at suppliers in

supply chain x (x) Accountability

Social standards in own production

plants in developing countries x (x) Accountability

Fair payment x x Justice

E M P L O Y E E

Employee rights x x Protection of human life

Honesty and quality in contract

dealings and advertising x x

Honesty, Reliability, Excellence,

Justice

Clear and accurate labelling about

products and services x x x Transparency

Timely payment of suppliers’

in-voices x x Justice, Excellence

Effective feedback, consultation

and/or dialogue x x Shura (Consultation)

Register and resolve complaints x (x) Reliability, Justice

Work together to address issues raised by responsible

entrepre-neurship

x [Shura]

Product quality and safety x (x) Excellence

Promote responsible handling of

products x (x) Accountability

Anti-corruption, business crime x x Avoid corruption, bribery

C U S T O M E R , S U P P L IE R , B U S IN E S S P A R T N E R

Consumer protection x x Justice

Training opportunities to people

from the local community x x x Knowledge

Open dialogue with the local

com-munity on adverse, controversial or sensitive issues that involve the

enterprise

x [Shura]

Try to purchase locally x

Encourage employees to partici-pate in local community activities

x x _[Shura] S O C IE T Y

Give regular financial support to

local community activities and

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Implementation of ethically

respon-sible marketing x (x) Accountability

Principles/methods aimed at

pre-venting dishonesty and corruption x x Honesty

Promotion of/ support of

environ-mental initiatives x (x) Stewardship

Reduce enterprise’s environmental impact in terms of energy

conserva-tion, waste minimisation and recy-cling, pollution prevention, protec-tion of the natural environment and

sustainable transport options

x x x Moderation

Use sustainability of products and services to gain an advantage over

competitors

x Supply clear and accurate

environ-mental information on its products,

services and activities to customers, suppliers etc.

x x Transparency (~Honesty)

Consider environmental impacts when developing new products and

services

x x

Assessment of the ecological

im-pact of investment and acquisition

decisions

x Environmental friendly production

processes x

Measures for the reduction of

pollu-tion emissions x

Ecological standards at suppliers in

supply chain x

Use of renewable energy x

Ecological standards in own

pro-duction plants x

Certified system of environmental

management x E N V IR O N M E N T

Environmental awareness of

em-ployees x

x Stewardship, Accountability

Table 4: Comparison CSR practices EU/Germany and Islamic values

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5. Conceptual model for the research

Subquestions

Looking at the research question (“What is the impact of Islamic values on Muslim

entre-preneurs’ CSR attitudes in a European country such as Germany?”) four subquestions can

be identified:

1.) Which Islamic values do Muslim entrepreneurs know?

Although the description of Islamic values in Chapter 3 revealed that many values related to and instructions for fair and socially responsible business transactions can be derived from religious sources, it is not known to which extent Muslim entrepreneurs dispose of this knowledge. No study so far could be found that tested which values Muslims would identify as being Islamic. As a large part of Islamic values related to CSR are included in the Value Survey by Schwartz (1992) as self-transcendent values, it can be well-used as a tool for test-ing identification of values. However, based on recent surveys showtest-ing that for Muslims (in Islamic countries as well as Muslim minorities in European Union), religion has a higher im-portance in their daily lives than for other Europeans and especially Germans (GALLUP World Poll, 2007, World Values Survey) and as Islam is a religion offering guidance for all areas of life, especially a code of conduct and social as well as economic issues (Abuznaid, 2006), it can be expected that Muslim entrepreneurs are informed about their religious values.

2.) Are Muslim entrepreneurs aware of the impact of these values on their business prac-tices?

A study of CSR in Islamic banks (Mohammed, 2007) revealed that it cannot be presupposed that there is a natural relation between Islamic values and a Muslim business man’s awareness that these values are relevant for his daily business practices. The author interviewed Chief

CSR attitudes and practices Islamic values Awareness of impact on CSR

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them responded positively when asked about their awareness of a higher-order framework for CSR in Islam that “being an Islamic organization, it is their obligation to be socially responsi-ble according to the teachings of Islam in general” (Mohammed, 2007:187). In Chapter 2 it was mentioned that Biel and Nilsson (2005) considered the mental accessibility, awareness and activation of values an important factor in achieving value-congruent behaviour. Thus, as no further study testing the awareness of Muslims about Islamic values in general or related to business exists to my experience, no hypothesis can be established for this question.

3.) How do these values influence their attitudes towards CSR?

The literature review mentioned the positive relation between personal self-transcendent (or altruistic) values and ethical attitudes (e.g. Fritzsche and Oz, 2007). In addition, Islamic val-ues could be classified for a large part as transcendent. Hence, as Islamic self-transcendent values exist, it can be expected that Muslim entrepreneurs are positively influ-enced by them in forming an attitude towards CSR. However, for this to happen, these values must be known by the Muslim entrepreneurs and identified as Islamic, and they must be aware of the relationship between these values and their business activities. Hence, if question 2 and 3 can be answered positively, the same can be expected for this question.

4.) What does this mean in practice within the European and specifically German context?

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III. Empirical Analysis

1. Methodology and data

Qualitative research approach

A qualitative research approach is chosen for the empirical study. This was also recom-mended for the study of entrepreneurs’ personal values by Hemingway (2005:243) because “due to the highly personal nature of values in terms of their centrality to our sense of iden-tity, it may be argued that the traditional quantitative approach used in the study of personal values, lacks the required sensitivity needed to establish the nuances of respondents’ mean-ing.” Therefore, Hemingway (2005:244) suggests that in-depth qualitative interviews would be useful to “supplement the traditional quantitative studies of personal values that have pro-vided the framework for our understanding of the role of personal values to date”.

Shaw et. al. (2005) used a similar methodological approach in their study about ethical con-sumers which they considered adequate because the existing literature “fails to explore the importance of specific values within the context of ethical consumption” (Shaw et. al., 2005:187). An analogy to the entrepreneurial context can be made. To explore which values would be guiding the ethical consumers’ decisions, firstly, the authors conducted focus group discussions supported by a questionnaire which was used for a rating of the Schwartz Value Survey in the ethical consumer context. In a second step, they conducted face-to-face, in-depth interviews on the basis of this questionnaire. Shaw et. al. (2005:187) used an “accentu-ated population, thus a positive sample of ethical consumers” for their empirical study.

Subjects of the study

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test new interpretation. Hence, the sample does not need to be representative of a larger popu-lation, as is the case for experimental studies (Cooper and Schindler, 1998; Miles and Huber-mann, 1994; and Patton, 1990)”.

Procedure

The sampling method chosen for this research is non-probability sampling, and purposive sampling in particular. This method is used because of the nature of the research topic indicat-ing that the subjects must be both ‘Muslim’ and ‘Entrepreneur’. Members of the target group were found consulting a data base on the Internet listing Islamic businesses as well as through the contact of two local organizations related to Islam (and) business. The entrepreneurs were requested participation by e-mail and telephone. Out of 28 entrepreneurs contacted 10 re-sponded positively. Face-to-face interviews were conducted during October 2008.

Interview methodology

The aim of the in-depth interviews with duration of 1.5 - 2 hours was to obtain answers for the four sub-questions established in Part II, Chapter 5.

1. Which Islamic values do Muslim entrepreneurs know? Participants were asked to select

values from Values Survey by Schwartz (1992) which they identified as presenting the core message of Islam, and in a second step indicate the most important values.

2. Are Muslim entrepreneurs aware of the impact of these values on their business practices?

Participants were asked for the most important values for business and stakeholders.

3. How do these values influence their attitudes towards CSR? Participants were asked to

al-locate Islamic values to ethical dilemmas/situations and discuss their practicability in context, and they were confronted with two Islamic statements.

4. What does this mean in practice within the European and specifically German context?

Participants were asked to explain which values they found difficult to practice in the German environment.

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2. Results

The results of the interviews conducted with the Muslim entrepreneurs reveal an interesting and colourful picture of their CSR attitudes fuelled by an emphasis on Islamic values, contex-tual constraints, reasons for non-practise of these values, and other motivations. Before the results are described in detail, a statistical overview is provided.

Statistical overview

The majority of respondents were male (7 men and 3 women) and of Turkish ethnic origin (6 Turkish, 2 German, 1 Pakistani, 1 Indian). All entrepreneurs were owners of small and me-dium-sized businesses; the majority of them were micro businesses with up to 10 employees (8 companies; only 2 companies had more employees, up to 35). The following sectors were covered: commercial property management; retail - pharmaceutical, alternative medicine, import, textiles; tailoring; meat; insurance; event management; and forestry.

The concept of CSR

When asked about the term ‘Corporate Social Responsibility’, only three respondents said they had heard of it and had a vague idea of its meaning. However, after the European Com-mission’s definition of CSR was given and explained to them13, all entrepreneurs claimed that they practised CSR in their business on a daily basis.

Respondent ‘A’ stated that he would practise CSR in his company and also being member of an entrepreneur club that promotes training possibilities for young people and sports sponsor-ing. ‘B’ said that CSR would mean for his business to sell halal products to his customers - vitamin capsules without pig gelatine which would otherwise be difficult for Muslims to buy.

‘C’ identified her business purpose as being in line with CSR: to offer Muslim women Islami-cally-correct swimming suits and achieve their acceptance at public swimming pools. Feeling responsibility for this group of society, her aim was to achieve an acceptance that “although

people dress differently, they can be a part of this society and take part in all activities, but in an Islamic manner: modest, self-conscious”.

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ba-‘D’ referred to the link between his business and CSR arguing that as a meat producer he has responsibility towards his Muslim customers who want to buy halal meat. This involves that all ingredients must be halal and also the slaughtering in the supplier company must be checked. Ensuring that his company complies a 100% with halal regulations considered the entrepreneur as a responsibility towards the society where Muslims sometimes could not be sure whether a product is only halal by name or in its full content.

The importance of a social responsible business was also affirmed by ‘E’ who described Is-lam as a complete way of life, not complete without the 5 pillars and therefore an immanent social responsibility. ‘F’ argued that she would practise CSR everyday unknowingly because the environment (e.g. recycling, hygiene, special disposal of chemicals) and the care for the customer were priorities in her pharmaceutical business.

‘G’ brought up the term ‘social consulting’ meaning that in the insurance and finance busi-ness it would be his responsibility to consider the problems of the customer and the future development of his situation to advise him correctly. A CSR immanent company philosophy was identified by ‘H’ who saw his responsibility to offer products and services that were “so-cially useful”, managing events and projects that could bring society together dealing with social, human rights issues and including Islamic principles in the implementation, e.g. no alcohol during events.

Also ‘I’ exemplified the relevance of CSR for her business as it was her business purpose “to

do something for society… for Muslims in Germany”, and therefore she decided to sell Qur’an

players because they were not available here and because she saw it as an opportunity to help people learn more about Islam and integrate it into their daily life, e.g. by listing to the Qur’an on a journey or when waiting at the doctor’s. The environmental element of CSR was empha-sized by ‘J’ who said that his forest maintenance business would help to preserve the envi-ronment and therefore also benefit the society.

Evidence of the Impact of Islamic Values on CSR Attitudes of Muslim Entrepreneurs in EU Member State Germany