Islamic Business Ethics and their Application in Contemporary Corporate Governance
Keywords:
Islamic Business Ethics, Corporate Governance, OrganizationAbstract
This study explores the application of Islamic business ethics in shaping contemporary corporate governance, focusing on how timeless ethical principles are translated into modern institutional practices. Drawing on a qualitative approach, the research analyzed secondary sources including classical Islamic texts, governance reports, regulatory guidelines, and corporate disclosures from Islamic financial institutions. The findings reveal that principles such as justice (
‘adl), trust (
amanah), truthfulness (
siddiq), and public welfare (
maslahah) remain central to governance structures, particularly through mechanisms such as Shariah Supervisory Boards (SSBs), Islamic Corporate Social Responsibility (ICSR), and risk-sharing contracts like
mudarabahand
musharakah. These practices underscore the multidimensional accountability framework in Islamic governance, which extends responsibility beyond shareholders to God, society, and the environment. The study also highlights the role of international standard-setting bodies such as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB) in institutionalizing ethics across jurisdictions. Despite these achievements, the research identifies persistent challenges, including superficial CSR disclosures, uneven adoption of standards, overreliance on debt-like financial instruments, and tensions between ethical integrity and profit imperatives. By situating these findings within the broader discourse of governance, the study concludes that Islamic business ethics offer a distinct paradigm capable of enriching corporate governance globally. However, realizing their full potential requires stronger institutional commitment, greater harmonization of regulatory practices, and a deeper internalization of ethics within organizational culture.
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