"Islamic Entrepreunership"

An Islamic Perspective On Entrepreneurship

 

Miles K. Davis

Shenandoah University

Harry F. Byrd School of Business

14600 University Drive

Winchester, 22601

Virginia, USA

+ 1 (540) 545-7314

mdavi3@su.edu

Accepted to:

Journal of Management, Spirituality & Religion



 

Abstract

This paper considers religion as an explanatory variable for entrepreneurial behaviour. It examines the role religion plays in the entrepreneurial behaviour of those who adhere to the Islamic faith and a model is proposed to examine such behaviour in future research.

 

Keywords: Entrepreneurship, Islam, Entrepreneurial Behavior, Values, Muslims, Religion

 



Reference to this paper should be made as follows: Davis, M.K. (2013)‘Entrepreneurship: an Islamic perspective’, Int. J. Entrepreneurship and SmallBusiness, Vol. 20, No. 1, pp.63–69.

Biographical notes: Miles K. Davis is the George Edward Durell Chair of Management and Dean of the Harry F. Byrd, Jr. School of Business at Shenandoah University in Winchester. Prior to becoming the Dean of the Business  School in  July  2012,  he  served as  the  Founding Director of  the Institute for Entrepreneurship at the Harry F. Byrd, Jr. School of Business. He continues to teach courses on entrepreneurship, as well as conduct research on the intersection of religion and entrepreneurship. He also is a member of the Board of Trustees of the Amana Mutual Fund Trust, the largest shari’ah compliant mutual fund in the world.

 

 

“But seek, with the “wealth” which Allah has bestowed on thee, the home of the hereafter, nor forget thy portion in this world; but do thou good, as Allah has been good to thee, and seek not (occasions for) mischief in the land: for Allah loves not those who do mischief.” Al Qur’an (28:77)

Introduction

Through out history, people with different cultural beliefs and religious values have viewed entrepreneurial behaviour with varying degrees of legitimacy (Dana, 2010). Aristotle (384–322 BC), one of the leading figures of Greek philosophy and the founder of the field of logic, viewed entrepreneurial behaviour as unnatural and therefore not a legitimate activity for ‘citizens’; even as slavery and the inherent inferiority of women was seen as natural (Aristotle, 1924). Becker (1956) explained that some cultures consider business an unholy occupation. More recently, Enz et al. (1990) and Dana and Dana (2008) identified different value orientations among various communities, and concluded that value orientation might be an important component in entrepreneurship. Some cultures simply value entrepreneurial activity more than do others (Dana. 1995a), and empirical evidence suggests that some religions are less conducive to entrepreneurship than others (Dana, 1995b, 2005).

 

At the individual level of analysis a direct connection is beginning to emerge on the role of religion in entrepreneurial behaviour (Dana, 2010; Davis, 2010). Brammer et al. (2007) found that religious individuals tended to hold broader conceptions concerning the social responsibility of businesses than non-religious individuals. Regardless of whether a person is religious, it can be argued that individuals are influenced by cultural values propagated by religions (Inglehart and Baker, 2000; Fam et al., 2004). As suggested by Anderson et al. (2000), it seems reasonable to assume that religion has an impact upon the legitimisation of enterprise, despite secularisation.

Why Explore Entrepreneurship From An Islamic Perspective?

The study of Islamic Economics and Islamic Economic Behavior is in its early stages as an academic discipline (Khan, 1994; Haq, 1995). This early stage development of an academic body of literature related to economic activity known as ‘entrepreneurship’, from an Islamic perspective, is even sparser than that related to the general discipline of Islamic economics (Adas, 2006). The lack of academic writings about Islamic entrepreneurship has many reasons that include, but are not limited to: inaccessibility of ‘Western’ scholars to authentic and primary sources for writings on Islamic economic theory, many of which are written in Arabic, Urdu or other languages not commonly spoken by non-Muslim academics; the historical assertion by some Western scholars that Islam is incompatible with capitalism and hence private enterprise (Adas, 2006; Barber, 1995); and a lack of understanding of interpretive activities of Islamic actors (entrepreneurs) “who deconstruct and reconstruct the relationship between Islam, economy and entrepreneurship” [Adas, (2006), p.113].

Despite the challenges outlined above, there is scholarly tradition from which one can explore Islamic economic theory in general, and entrepreneurship specifically, from an Islamic perspective. Throughout Islamic history Muslim scholars have written on the economic teachings of Islam and its application to what we have come to call entrepreneurial activity (Siddiqi, 1972; Khan, 1994). The Qur’an (believed to be the revealed word of God by Muslims), Sunnah (the practices of the Prophet Muhammad), Fiqh (Islamic jurisprudence), social thought and historical experience have served as the Islamic basis for the confabulation of Islamic economic activity. It is also these sources that will form the basis for this article.

The main objective of this article is to present an outline of a general framework to examine Islamic entrepreneurial behaviour within a modern context. Specifically, it explores the role Islam plays in the entrepreneurial behaviour of entrepreneurs from the Islamic faith. The author acknowledges that any attempt to analyse religious and/or spiritual beliefs is challenged by conceptual and definitional consensus of the terms. Furthermore, to apply those concepts to a casual relationship stretches the limits of what can be analysed using objectivist oriented research methods. This article seeks to offer perceptions on religion and its impact on entrepreneurial behaviour, from the perspective of those directly involved with the respective religious belief and entrepreneurial behaviour.

It is important to understand Islamic entrepreneurial behaviour and its underpinnings as Islamic economic systems and their associate theories are increasingly becoming part of non-Muslim financial institutions (e.g., HSBC, UBS, Bank of America) and economic systems (e.g., USA and the UK) (Ayub, 2007; Iqbal and Mirakhor, 2007)

 

What is Meant by Entrepreneurship?

 

During the 7th century, when the religion of Islam was birthed, people were not referred to as “entrepreneurs”. The word “entrepreneurs” and its associated term “entrepreneurship”, derive from the French verb “entreprendre”. According to Traduction Dictionnaire Collins Francais Anglais (http://dictionnaire.reverso.net/francais-anglais/entreprendre) the verb “entreprendre” means; to undertake; to launch; to begin.  Arguably, contemporary scholarship about entrepreneurship is based in the work of economist Joseph Schumpeter (1883-1950).  Schumpeter postulated, “that the main agents of economic growth are entrepreneurs who produce new products, new methods of production, and other innovations that stimulate economic activity” (Barringer and Bluedorn 1999 p. 422). Cohen and Levintal (1990) make a linguistic distinction between entrepreneurs and entrepreneurship. “Entrepreneurship” is the action of being an “entrepreneur”: one who undertakes innovations. According to Cohen and Levintal, innovation within the context of entrepreneurship is the development of new customers value through solutions that meet new needs, inarticulate needs, or old customer and market needs in value adding new ways.

Katz and Green (2009) posit that it is innovation that distinctively makes a business entrepreneurial. However, if we limit entrepreneurship only to products, services or goods that are truly novel we cut out a large swath of startup businesses, as they are more imitative than innovative (Katz and Green, 2009). Stevenson and Jarillo (1990) defined entrepreneurship as: “The process by which individuals – either on their own or inside organizations – pursue opportunities without regard to the resources they currently control” (p.23). Stevenson’s and Jarillio’s definition puts the focus on entrepreneurship as the pursuit of opportunity regardless of organisational context or the novelty of the opportunity.

 

Using the definition of entrepreneurship offered by Stevenson we open up the world of entrepreneurship to include those solo projects, which may only involve an individual working part-time, and enterprise building activities that may involve creating jobs for a large number of people. But in order to distinguish entrepreneurship from employment this article focuses on ownership as the basis to call one an entrepreneur (Katz and Green, 2009). Thereby, allowing anyone who is a small business owner, or works for himself or herself instead of others, to be considered an entrepreneur. It is this framework that shapes our discussion about Islamic entrepreneurs.

 

Islamic Perspective on Entrepreneurial Behavio

There are two main sources that form the basis for Islamic thought; the Qur’an and the sayings and traditions of the Prophet Muhammad (a’hadith) (Mutahhari, 1985). The Qur’an is seen as more than just a book of guidance for Muslims (those who follow Islam); it is experienced as the literal word of God. And where it is not clear what those words mean Muslims look to the sayings or actions included in the a’hadith for interpretation of the meaning of verses (Beekum and Badawi, 1999). Khan (1994) referencing the Qur’an and a’hadith, states that:

“God, according to the Islamic view, has created the universe for the benefit of all human beings. God has made the resources of this earth available to man who has the responsibility to make use of them, to mold them, and to transform them according to his needs.” (p.3)

 

The Islamic worldview advanced by Khan clearly puts human kind in an activist role in shaping their destiny. Humans are responsible for pursuing opportunities; regardless of the resources they currently control, to meet their needs. Ergo, one could argue that the Islamic view articulated by Khan places entrepreneurship as the preferred economic behavioural model for Muslims.

In the Qur’an there are clear references to the ‘work’ one does and the ‘wealth’ or ‘bounty’ that one is expected to seek.

 

“…On earth will be your dwelling place and your means of livelihood for a time.” (Qur’an 2:36)

 

“…to men is allotted what they earn, and to women what they earn. But ask
God of His bounty, for God has full knowledge of all things.” (Qur’an 4:32)

 

“It is We (God) who have placed you with authority on earth, and provided you therein with means for the fulfillment of your life…” (Qur’an 7:10)

“And say: Work (amalu), soon will God observe your work…” (Qur’an 9:105) “We have made the night and the day… that we may seek bounty from your Lord…” (Qur’an 17:12)

 

“It is out of His Mercy that he has made for you the night and day that you may rest therein and that you may seek of His bounty; in order that you may be grateful.” (Qur’an 28:73)

 

The verses above make it clear that Muslims are expected to work for a living and that work is seen as an actively that is consistent with God’s will and has moral value. The verses referenced clearly state that God created the night so that one can rest in order to seek God’s bounty during the day. Additionally, the creation of wealth is seen as God’s bounty, grace and goodness. Interestingly, the Qur’an also states; “That man can have nothing but what he strives for” (Qur’an 53:39). This theme runs through the Qur’an with both spiritual and secular implications. Related to the theme of this article, a person is expected to work for economic success in this life. In fact, those who beg, or engage in other parasitic lifestyles, without extenuating circumstances, are roundly chastised in the sayings (a’hadith) of the Prophet Muhammad (Khan, 1994).To not work, when one is able, is seen to be in defiance of God’s law and the resulting poverty from not working is seen to lead one to Kufr (denial of God’s teachings) (Asad, 1980).

 

In addition to the disapproval of not working Islam teaches the dignity of engaging in labor to support oneself:

"It is better for anyone of you to take a rope and cut the wood (from the forest) and carry it over his back and sell it [as a means of earning a living] rather than to ask a person for something and that person may give him or not" (Sahih Bukhari Volume 2, Book 24, Number 549).

It is this a’hadith that brings us most clearly back to the entrepreneurship framework offered by Stevenson and Jarillo (1990). The Prophet Muhammad clearly states it is better to pursue an opportunity to provide for oneself regardless of the resources presently under ones control than to depend upon someone to provide for you.  

 

In addition to providing for oneself, entrepreneurial behaviour is meant to benefit the person in providing means to lead a more virtuous life and benefit the community in helping to support good works (e.g., giving in charity to those in need or helping to build a mosque). Wafica Ali Ghoul (Dana, 2010) sums up the behaviour of a Muslim entrepreneur as follows: “respecting the fundamental values of Islamic Shariah, which balance the interests of society and individuals. These values include fairness, non-exploitation of the poor, moral responsibility, accountability, and equity in financial dealings” (p.273). The pursuit of entrepreneurial success is not to be performed as a means of self-aggrandisement, but is to be engaged in as a ‘spiritual’ act in communion with those who help one to be successful and this includes the community at-large (Said et al., 2004; Beekum and Badawi, 1999). Individuals are seen as the ‘stewards’ of the ‘gifts’ given to them by God (Said et al., 2004; Beekum and Badawi, 1999). Management of that stewardship extends beyond financial success of the firm and into helping society be better.

Based on the information above Table 1 offers a model to examine the behaviour of Islamic entrepreneurs. Within the model is the role of the entrepreneur, who is the exemplar of entrepreneurial behaviour, sources of wisdom for the entrepreneur, motivation for wanting to be an entrepreneur, and finally, the primary quality an entrepreneur should have.

 

Table 1 Entrepreneurial model Muslims follow 

Islam
1	Entrepreneur as	Steward
2	Exemplars	Prophet Muhammad
3	Source of wisdom for entrepreneur	The Qur’an and Hadiths
4	Motivation for entrepreneurship	Submission to God’s will
5	Primary quality of an entrepreneur	Concern for community

 

Discussion and Conclusion

 

The role of religion in the entrepreneurial behaviour process is a complex one. Research has already been done that establishes the role personal values play in decision-making and career selection (Davis, 2008; Brown and Crace, 1996; Barnett and Karson, 1987). And since personal values can be directly linked to religious beliefs (Garcia-Zamor,2003; Inglehart and Baker, 2000) it is highly probable that religion influences the motivation of entrepreneurs (Mentzer, 1988).

 

 

It can be argued that Islam itself does not necessary directly promote entrepreneurial behaviour. However, Islam, as with all religions, teach, promote and propagate cultural value systems within the societies it is a part of. These value orientations in turn affect propensity toward entrepreneurial activity. From its early roots Islam was tied in to entrepreneurship, as the first wife of the Prophet Muhammad (Khadija bint Khuwaylid) was a merchant; an entrepreneur if you will (Katz and Green, 2009). She was also the first convert to Islam. It was Khadija’s wealth that supported the Prophet’s mission and allowed him to spread the message of Islam in its formative years (Faruqi and Faruqi, 1986). That reality coupled with verses from the Qur’an, which support self-sufficiency and entrepreneurial behaviour, should predispose Muslims to engage in venture creation for support of self and the greater community.

 

Additional research needs to be done that explores the entrepreneurial behaviour among Muslims and in Muslim communities. The model proposed in Table 1 is a framework that can be used to examine such behaviour and determine the validity of the model. Furthermore, Islamic scholars like Badawi (2006) propose that Islam “enjoins a work ethic that equips the individual to excel in economic pursuits” (p.208). An empirical examination of the impact of Islamic teachings on economic activity, especially entrepreneurship, could be useful in addressing portions of the world that suffer from high unemployment and underdevelopment that have large Muslim populations.

 

Starting from Adam Smith (1759; 1776) to Ayn Rand (1957) and further shaped by both “freshwater” (Carnegie Mellon, the University of Chicago, the University of Rochester, and the University of Minnesota) and “saltwater” (Berkely, Harvard, MIT, University of Pennsylvania, Princeton, Columbia, Stanford and Yale) theories of economic activity, conventional economic analysis assumes that human beings are inherently selfish (Khan 1994); and that the primary concern of economic activity, nee entrepreneurial endeavors, “is to derive maximum satisfaction or utility; and in doing so they maximize the utility of the society as a whole” (pg. 4). The logical extension of this is the self-centered behavior of individuals is both rationalized and encouraged in regards to enterprise formation and the resulting economic gains (Smith 1759; Rand 1957; Stigler and Becker 1977).

The Islamic worldview places compliance with God’s ordinances and support for the community as the bases for economic activity. Social obligation takes precedence over individual needs and the benefit to the community must be considered in the formation of enterprises (Khan 1994; Haq 1995), Hence, while the nature of businesses owned by Muslims may on the surface look the same as businesses owned by non-Muslims (e.g. dental offices, supermarkets, restaurants), it is the exemplar, source of wisdom, underlying motivation and economic framework that distinguishes the Muslim entrepreneur.

Additional research needs to be done that explores the entrepreneurial behavior among Muslims and in Muslim communities.  The model proposed in Table 1 is a framework that can be used to examine such behavior and determine the validity of the model. Furthermore, Islamic scholars like Badawi (2006) propose that Islam “enjoins a work ethic that equips the individual to excel in economic pursuits” (pg. 208).  An empirical examination of the impact of Islamic teachings on economic activity, especially entrepreneurship, could be useful in addressing portions of the world that suffer from high unemployment and underdevelopment that have large Muslim populations.

 

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