Asyraf Wajdi Dusuki and Nurdianawati Irwani Abdullah

The doctrine of corporate social responsibility (CSR), which has emerged and developed rapidly as a field of study, is a framework for the role of business in society. It sets standards of behavior to which a company must subscribe in order to impact society in a positive and productive manner while abiding by values that exclude seeking profit at any cost. Despite the many attempts to construe CSR initiatives, it remains open to wide criticism for its inherent problems via-à-vis justification, conceptual clarity, and possible inconsistency. These problems are more acute when it comes to implementing and operationalizing CSR on the ground, especially in a situation that involves trade-offs.

This paper offers an instructive understanding of CSR from an Islamic perspective. In particular, the implication of maqasid al-Shari`ah (the Shari`ah’s objectives) and the application of maslahah (the public good) to CSR are discussed in detail to shed light on how Islam’s holistic and dynamic perception of CSR take into consideration reality and ever-changing circumstances. These principles also provide a better framework that managers can use when faced with potential conflicts arising from the diverse expectations and interests of a corporation’s stakeholders.

Introduction

Over the past twenty years, corporate social responsibility (CSR) has blossomed as a framework for the role of business in society and for setting standards of behavior to which a corporation must subscribe in order to impact society in a positive and a productive manner. The emergence of social enterprises, business ethics, environmental practices, a human rights approach to recruitment and employment conditions, and investment in the community are examples of such impacts.

Many believe that CSR is the tribute that capitalism everywhere pays to virtue.1 According to this view, corporations are no longer defined as entities with a mandate to pursue profit and power relentlessly, regardless of the potential harmful consequences. Instead, they are expected to use their extensive resources to soften their self-interest image by presenting themselves as humane, benevolent, and socially responsible. Due to globalization, corporations undoubtedly govern society, perhaps even more than governments do. Governments are increasingly looking at these giant and resource-rich entities to address socioeconomic problems. For example, multinational corporations are perceived as the key to development through providing jobs, paying taxes, transferring technology, and making charitable contributions to education and health care. The issue of CSR has only grown in importance in light of recent business scandals involving such large corporations as Barings, Enron, Arthur Anderson, WorldCom, and others.

Despite the tremendous efforts to promote CSR among corporations and society at large, this concept is not without criticism. For instance, how can CSR be operationalized effectively and efficiently on the ground, especially in situations that involve trade-offs? The potential conflict arising from the diverse interests and expectations among various constituents in society further hinders CSR initiatives.

This paper, therefore, delineates the concept of CSR in light of an Islamic perspective. In particular, the following discussion on the maqasid al-Shari`ah (the Shari`ah’s objectives) and the principles of maslahah (the public good) serve as foundations for such a perspective. The implications of these principles are discussed in detail to shed light on how Islam perceives CSR in a holistic and dynamic way, taking into consideration reality and ever-changing circumstances. These principles also provide a better framework that managers can use when faced with potential conflicts arising from diverse expectations and interests of a corporation’s stakeholders.

Since this paper is among the few attempts to discuss CSR from an Islamic perspective, it produces a conceptual justification that might have some practical relevance for business.2 Indeed, the ensuing discussion fills an important gap in CSR literature. The following section briefly discusses CSR’s evolution in the West. Section 3 describes the maqasid al-Shari`ah together with the principle of maslahah. The maqasid’s implication on CSR is further elaborated in section 4, and a description of maslahah as a framework for conflict resolution while implementing CSR is offered in the fifth section. The conclusion is presented in the final section.

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