Islamic Work Ethics: How they Affect Shareholder Value

Abstract

The textile industry constitutes almost 68 percent of Pakistan’s total exports, forming a virtual back bone for the economy. This study explores how Islamic work ethics, along with managerial integrity and performance, enhance shareholder value. Three dimensions of shareholder value were analyzed: profit, customer satisfaction and employee loyalty. The study employed correlational research design through hypotheses testing. Correlational interpretations observed the impact of Islamic work ethics, managerial integrity and performance on shareholder value. This study utilized a sample of 156 managers in Pakistan’s textile industry. Based on literature review a questionnaire containing 42 items was developed and distributed to collect the data. The collected data were processed and analyzed using SPSS and AMOS. The results of the study indicate that Islamic work ethics and managerial integrity have greater potential to protect shareholder value. The remedy for the global economic crisis lies in values and ethics that must be inculcated in organizational culture for sustainable business performance and reputation. This study introduces the concept of inviting-for-good and forbidding-from-wrong (IGFW), the most important component of Islamic value system in corporate management. In addition to investigating the role of Islamic work ethics in protecting shareholder value, the study discusses how to build managerial integrity.

Keywords: Islamic work ethics, managerial integrity, shareholder value