Business Ethics in Islam

The term ‘business ethics’ refers to the behavior that a business organization is supposed to adhere to in its interaction with society, transactions with customers and in its internal affairs. The concept of business ethics is as old as business itself.

Initially, different cultures and regions had different ethics of business. With increasing globalization, the various sets of business ethics are continuously acquiring common values and forms. Islam has given guiding principles for all human activities and also prescribes and explains the ethics of business.

However, the Quran is not the only divine text that lays down such instructions and Muslim thinkers were not the first to conceive this idea. The Bible, for instance, also has many notions that can be and have been applied to commercial activities.

Hammurabi, in his famous code, addressed various commercial issues. Plato discussed justice in The Republic, and Aristotle explicitly discussed economic relations, trade and commerce in his Politics. Many Muslims are unaware that Aristotle too condemned usury. Also, he gave the classic definition of justice as giving each his due, treating equals equally and trading equals for equals.

These issues were also analyzed by Christian scholars. For instance, Thomas Aquinas discussed business in the context of justice and honesty, and condemned usury. Luther, Calvin and John Wesley, among other personalities of the Reformation, discussed trade and commerce, and led the development of the Protestant work ethic. However, in the modern West, economic activity has been divorced from religion just as politics has been separated from the church.

Still, if we compare Islamic business ethics with present-day western business ethics, we find numerous similarities. For instance, workplace harassment, discrimination in hiring and promotion, employment benefits, layoffs, conflict of interest, quality control, misuse of business assets, environmental pollution, etc., are matters on which Islamic and western approaches are more or less similar.

In fact, regarding such matters of common approach, Islam often lays down more benevolent provisions and puts more stress on their observance. For example, about employee-employer relationship, Islam very clearly declares that both enjoy the same dignity socially and legally. As a general rule, Muslims are instructed to choose for their fellow men what they choose for themselves. The Prophet (PBUH), in his farewell sermon, instructed Muslims not only to feed and clothe their slaves just like themselves, but also not to treat them harshly even if they committed a fault. Applying this to employees, one can imagine the standard of the working environment and employment benefits that Islam entails.

Just as there are differences between other aspects of Islamic and western practices, Islamic and western business ethics too have certain differences. The most important discerning features are their sources and nature. While western business ethics are secular, Islamic business ethics originate from revelation and the traditions of the Prophet (PBUH), the Quran and Sunnah.

A breach of western business ethics never results in the violator incurring a sin. In the case of Islamic business ethics, a breach always causes divine displeasure. Consequently, Muslims must abide by these instructions not only for the betterment of society, but also to secure their afterlife.

This also means that even if there is no supervisory authority, a Muslim is still bound to comply with the norms of fair business practices. For instance, Islam does not allow an entity to deal in alcohol, drugs, gambling, gharar, pork, pornography, prostitution and riba. In jurisdictions where all or some of these are allowed, Muslims there must avoid them because Islam has prohibited these trades.

In other words, Islamic business ethics must be observed by the believers in Muslim and non-Muslim jurisdictions alike.

Thus, a true Muslim must never neglect the welfare of employees, performance of business covenants, quality standards, the environment, social responsibilities of the enterprise, etc., whether he is running a venture in Pakistan or in the US.

Unfortunately, present-day Muslims mostly just talk about the Islamic way of life without actually practicing it. Ask a Muslim entrepreneur about Islamic business ethics and he will gladly give a lengthy sermon on the instructions given in the Quran and Sunnah on the topic and will accurately narrate numerous examples set by early Muslim businessmen regarding honesty in trade and employee welfare. However, his real conduct will be the opposite. Unfortunately, this is the general rule.

No wonder, in a report recently published in Financial Times, some Islamic financial experts openly criticized Islamic financial institutions for resorting to “juristic engineering” to bypass Islamic restrictions in order to maximize profits. Thus, Islamic financial products and services, in most of the cases, are Islamic only in form, not substance.

Does this mean that Islam makes hypocrites or that the provisions given in the Quran and Sunnah are no more practical? Not at all. Can we say that Christianity makes thieves just because there are thieves who happen to be Christian? Does the Quran not say that revelation is valid for all times?

The fault lies with corrupt and selfish Muslim businessmen who disregard Islamic injunctions for worldly enrichment. By growing a beard, praying five times a day and fasting in Ramazan, they believe it is enough to fulfill their obligations to God.

Can the beard, prayers and fasting really absolve them from ignoring their duties to their employees, clients, competitors, consumers and society as a whole? Is it possible to deceive God?

Islamic Business Ethics in a Nutshell


Yes, it is true that the physical, earthly dimension of a human is based on two main characteristics: greed and anger. The former attracts whatever it perceives to be beneficial and the latter repels whatever it perceives to be harmful.

But the spiritual, heavenly dimension consists of mind and conscience which have the potential of controlling the elements of greed and anger. One whose spiritual powers control the physical powers is indeed an ethical person; and one who lives life only by the elements of anger and greed has not actualized the potential of soaring from the worldly level to the heavenly level.

Adding the adjective “Islamic” to “business ethics” might surprise some. But one has to realize that Islam is more than just a religion in the spiritual sense of the word; it is a way of life. Even the secular aspects of life are greatly influenced by spiritual values.

There is no difference between the sphere of worship and the sphere of business; Islamic laws govern the family life of Muslims well as their social conduct.


The foundation of Islamic business ethics depends on delineating the purpose of human life. When Adam and Eve as well as the Satan were sent down to the earth, Almighty God declared:

“All of you get down from the Garden to the earth, some of you being the enemies of the others, and there is on the earth your abode and the necessities of life for a fixed period of time.” (The Qur’an 2:36)

“All of you get down from the Garden. Once you are on the earth, the guidance will certainly come to you from Me, and then whoever follows My guidance there will be no fear for them nor shall they grieve. But those who do not follow My guidance, who disbelieve and reject Our revelation, they are the inmates of the Fire, in it they shall abide”. (2:38-39)

The Qur’an further tells us that this earth and its surrounding atmosphere have the resources for us to sustain our lives on it:

“Allah is He who created the heavens and the earth, and send down the water from the sky with which He brought forth fruits as sustenance for you. He made the ships subservient to you so that they may flow in the sea with His command. He (also) made the rivers subservient to you, and He made the sun and the moon-which are persistent (upon their course) – subservient to you, and He made the night and the day subservient to you. (In short,) He gave you all that you asked Him. If you count Allah’s blessings, (they are so many that) you will never be able to number them – (but still) the human is very unjust (and) very ungrateful!” (14: 32-34)

These verses clearly state the followings:

• This earth is our abode.

• This earth and its surrounding atmosphere have the resources to sustain our lives on it.

• Divine guidance will come to us and we are expected to follow it.

• Satan is our enemy and will try his best to misguide us.

• The life on this earth is for a fixed time only.

• The hereafter is the final destination. Whether the final destination will be blissful or painful depends on whether or not we follow the divine guidance.

So a human being is a creation of God, a citizen of this earth, surviving by wisely using its natural resources alone or with the, cooperation of fellow humans. Human interaction may be pictured as following:


As a creation of God, a human being is expected to obey the Divine commandments in relation to the self, to fellow humans, and also towards the earth. We cannot forget the satanic temptations that overwhelm many people.

This three-way interaction defines the perimeter of Islamic ethics in the business sphere. The guiding principles in these interactions are:

1. Obeying the Divine commandments. (2:38 above)

2. Dealing with others on the basis of justice and fairness. “O you who believe! Be upright for the sake of Allah, in testifying for fairness: and do not let the hatred of a people urge you to be unjust, be just (since) that is closer to piety. Fear (from displeasing) Allah, verily Allah is Aware of what you do.” (5:8)

3. Being moderate in one’s personal life and in the use of natural resources.“O you who believe! Neither forbid the (use of) good (things) that Allah has allowed for you nor exceed the limits because Allah does not love those who exceed the limits.” (5:87)