miércoles, 25 de agosto de 2010

Islamic laws and business (august 9th)

1. Concept: 
Islam: islam is one of the most important religions in the world. "It is a monotheistic faith which is regarded as a revelation through Muhammad as the prophet of Allah. [...] Islam is now the professed faith of nearly 1000 million people worldwide, particulary in North Africa, the Middle East, and parts of Asia. To be Islamic means to affirm and individual surrender to God and live as a member of a social community" ( Agalgati and Krishna, 2007: p. 82)

koran: "the Islamic sacred book, believed to be the word of God as dictated to Muhammad by the archangel Gabriel and written down in Arabic. The Koran consists of 114 units of varying lengths, known as suras; the first sura is said as part of the ritual prayer. These touch upon all aspects of human existence, including matters of doctrine, social organization, and legislation" (Oxford Dictionary, 2010). 

Islamic Law:  It is a legal system based in Koran's ideas. Accroding to Wild (2004): "Islamic law is the most Widely practiced legal system today. Islamic law was initially a code governing moral and ethical behavior and was later extended to commercial transactions. It restricts the types of investment can make and sets guideline for  business transactions" (p. 95).


2. Question
What is the influence of the Islamic Law  in  Business and Globalization  process? 


A.
The islamic Law (Koran or Qur'an) establish norms for all  aspects of the life of people: personal life, family, social structures, and obviuosly work and business.  Work is one of the most important parts en the life of a person because it's an order from God and for this reason Business and work are based in a strong ethics: this ethics, acoording to the interpretation of  Ali (2005), have important values that determine the way in which business are made and  the main values are "the prohibition of usury, cheating, engaging in unlawfull business,  swearing, monopoly, withholding of commodities to inflate prices, and those that accentuate discipline, truthfulness, dependability, effort, fulfillment of contract conditions, and observing guidelines". (p. 69).  And, Obviously the lack of these values can mean severe punishmnets imposed by the legal system.  

This law has caused, throughout history, cultural and ideological differences in the development of  business in western and islamic countries. For example, the finance system in islamic countries is very different to the system of Western countries, because of the classic rules that prohibit to charge interest and to pay interest on bank deposits (Wild, 2004: 95). however, this has  slightly been  modified in recent years in order to attend the needs of islamic people and investors in the Region and now many companies consider that Financial system as an attractive sector. 

Undoubtedly, religious beliefs have limited the  total integration of islamic and muslim countries in international business, but this does not mean the total absence of global trade, because of the importance of islamic resources in the global context, mainly Petroleum, that have forced the integration process. For this reason negotations between islamic and Western countries requiere a real knowlegde  and respect for islamic laws and culture in order to achieve good agreements and in this context, It's important to take in account that Women integration in islamic social and busines life is still very limited and consequently western countries mustn't include women in negotation process.

However, the islamic beliefs about business and trade aren't the main limitant for the globalization of islamic contries. For many years, islamic countries have been associaded with high political risk, especially the risk of terrorism from extremist groups such as Hamas and Hezbola, because of the interpretations of  Quram (for some people, these are misconceptions of the islamic law) that justify atacks to no-islamic cultures that threaten th religion. clears example of this beliefs are the  terrorist attacks of September 11, 2001 against the US, the attacks against the transport system of Madrid and London in 2004 and 2005 respectively and constant suicide attacks in the Arab Region, that had a direct effect in the Trust in the region and consequently in Investment and trade negotiations with islamic countries. 

 Suder ( 2004) expressed in this book "terrorism and international business environment" that "The image of islamic radicals operating in these countries has complicated existing trading relationships[...]. Various economic studies, indicators and rakings also mark islamic countries as inhospitable. some of the studies and rankings are argued to be biased against developed countries not heeding the demands of open markets and free trade principles" (p. 139). 
In conclusion,  spite of  the great advances of globalization process,   Islamic countries have failed in this process and the most important reason is the influence of  Islam. Islamic Law, as a theocratic law,  has a strong influence in all aspects of th life of a person and business aren't an exception. This case presents clearly  a situation where the religion and legal system determine the way of business and in this context appear "political Risk" as one of the most important decision variables to do business with islamic counterparts. 
Point of view: 
Certainly, globalization  is one of the most important issues in the world and it is understood not only as the increase of free trade among all the countries but also as a process where culture, beliefs, nationalistic feeling are shared.  In many countries people are concerned about the possibility  of losing important aspects of their culture, their traditions and in general, elements that form the history of a community and undoubtely are part of Identity of people. So, religion is one of the most important parts of Culture because it gather core beliefs of people, expectations about  life and, in particular,  notions of good and evil and in line with these notions a moral is defined.  Maybe, Islam is the strictest religious system in the world and it is a real way of life that influence the business around the world. 

I think  that  for western people is very difficult to understand Islamic beliefs, especially the role of women in society and the terrorism as a way to preserve the religion. But,  Religion is generally a very stable system and rarely goes radical changes that modifie the way in which people live; especially when religion enjoys the status of Legal system as  in islamic countries.   For this reason, I think that is very difficult ro reduce the poltical risk in these country, at least in the short term. Managing Political risk in Islamic countries requires the adaptation to business environment through strategies such as development assistance and isurance, In  addition to gathering information fron reliable sources in orden to know the current conditions of each region. 


Further, western people should seek alternatives that promote dialogue and negotiation in orden to reach not only benefits on commercial topics but also benefits to  communities, ie, Globalization must to improve the living conditions of people but it shouldn't be associated to threats to culture and identity. 

Oxford Dictionary. (2010). [Online]. available at : http://oxforddictionaries.com/view/entry/m_en_us1259207#m_en_us1259207



Wild, J. (2010). International Business The challenge of Globalization. Pearson. 

Image: armed taliban soldiers. Getty images. [Online]. Available at: http://www.gettyimages.com/detail/86017179/Getty-Images-News
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