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Corporate Social Responsibility: Conventional and Islamic Perspectives
Abstract
This chapter is a literature study on corporate social responsibility (CSR) of Islamic banks since the concern over CSR is significant to Islamic banks. A review of CSR theories shows that CSR is originated or influenced by Western values. Perhaps, that is why studies on CSR are quite few in Islam although its notion has been suggested to be consistent with an Islamic view of society. Therefore, the purpose of this study is to review the literature of CSR of Islamic banks by firstly looking at the discussion from a conventional and Islamic perspective. This chapter reviews six conventional theories on CSR with the Islamic notion of CSR namely, the Economic Theory, the Agency Theory, the Social Contract Theory, the Legitimacy Theory, Stakeholder Theory and Philanthropic Theory. Through literature review, it is found that, in conventional CSR there are few ulterior motives of doing it either for profit maximization or to comply with society's expectations or to get legitimacy from society or the combination of all motives except for altruistic CSR which is genuine philanthropy. On the other hand, the main motive of doing it in Islam is generally based, among others, on Tauhid, vicegerency, accountability, Taqwa, Ibadah and Da‘wah principles. While the review done on CSR of Islamic banks, found that Islamic bank is an acknowledged legal entity in Islam, which consequently, is accountable for CSR. Therefore, there is a need to propose an Islamic CSR framework that can be used by the regulators involved to establish a CSR framework that is comprehensive, applicable and to be practiced not only in the Islamic banks, but also for other Islamic financial institutions and all Islamic business entities.
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