Chapter 1 Introduction of Islamic Entrepreneurship

Introduction of Islamic Entrepreneurship. This slide covers the BIMM5043 Entrepreneurship from Islamic Perspective class for master students in UUM.

1. INTRODUCTION ENTREPRENURSHIP FROM ISLAMIC PERSPECTIVE BIMM5043 By: Mejar Dr. Mohd Adib Abd Muin, IFP, CQIF (Wealth Management) 1 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE

2. OUTLINE Introduction Islamic View Definition & Nature of Entrepreneurship Islamic Entrepreneurship History Developing creativity & Innovation within Islamic framework 2 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE

3. INTRODUCTION Entrepreneurship generally means offering a new product, applying a new technique or technology, opening a new market, or developing a new form of organization for the purpose of producing or enhancing a product . Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit . The most prominent example of entrepreneurship is the starting of new businesses. 3 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE

4. In Islam, entrepreneurship is viewed as a noble and important activity that aligns with both spiritual and economic objectives. It is seen not only as a means of wealth creation but also as a tool for contributing to societal welfare and justice. Several principles guide entrepreneurship from an Islamic perspective, emphasizing ethical conduct, fairness, and social responsibility. 4 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE ISLAMIC VIEW

5. Fair Trade and Honesty The Quran repeatedly calls for honesty and fairness in business dealings. Entrepreneurs are encouraged to engage in trade that is transparent and free from deception. Surah Al-Baqarah (2:275) : "Allah has permitted trade and forbidden usury ( riba )." This verse emphasizes the legitimacy of trade and prohibits unethical financial practices like usury ( riba ), encouraging entrepreneurs to conduct fair and permissible (halal) business. Surah Hud (11:85) : "And O my people, give full measure and weight in justice, and do not deprive the people of their due, and do not commit abuse on the earth, spreading corruption." This verse instructs entrepreneurs to deal justly in trade, to give full measure, and avoid corrupt practices. Surah Al-Baqarah (2:282) : "O you who have believed, when you contract a debt for a specified term, write it down. Let a scribe write [it] between you in justice." This verse underlines the importance of documenting business contracts, ensuring transparency and accountability in business transactions. 5 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE QURANIC VERSES ON ENTREPRENEURSHIP AND TRADE

6. Encouragement to Seek Sustenance through Trade Entrepreneurship and trade are seen as means through which one can seek sustenance and the bounty of Allah. Surah Al-Muzzammil (73:20) : "...Others travel through the land, seeking of Allah's bounty..." This verse supports entrepreneurship by acknowledging the pursuit of business and trade as a legitimate way to earn a living. Surah Al-Jumu’ah (62:10) : "...And when the prayer has been concluded, disperse within the land and seek from the bounty of Allah, and remember Allah often that you may succeed." After fulfilling religious obligations like prayer, Muslims are encouraged to engage in permissible activities, such as business and trade. 6 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE QURANIC VERSES ON ENTREPRENEURSHIP AND TRADE

7. The Virtue of Trade Prophet Muhammad (SAW) was an entrepreneur himself and greatly encouraged trade. The Hadith highlight entrepreneurship as an honorable profession, provided it is conducted ethically. The Prophet (SAW) said : "The truthful and trustworthy merchant will be with the Prophets, the truthful, and the martyrs." (Sunan at- Tirmidhi , 1209) This Hadith highlights the high status given to traders who are honest and trustworthy in their dealings, reflecting the ethical standards expected of entrepreneurs in Islam. The Prophet (SAW) said : "Nine-tenths of sustenance ( rizq ) is in trade." (Narrated by Tirmidhi ) This emphasizes the importance of trade and entrepreneurship as a major source of income and provision. 7 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE HADITH ON ENTREPRENEURSHIP

8. Ethical Conduct in Business Prophet Muhammad (SAW) emphasized fairness, honesty, and justice in business dealings, and warned against fraud and deceit. The Prophet (SAW) said : "He who deceives is not of us." (Sahih Muslim, 102) This Hadith strongly condemns deceit and dishonesty in business transactions. The Prophet (SAW) said : "May Allah show mercy to a man who adopts a kind attitude when he sells, buys, and demands for the repayment of loans." (Sahih Bukhari, 2076) This Hadith underscores the importance of maintaining kindness and fairness in all business dealings. 8 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE HADITH ON ENTREPRENEURSHIP

9. Accountability and Trust In Islam, wealth and resources are seen as a trust from Allah, and entrepreneurs are accountable for how they manage these resources. The Prophet (SAW) said : "All of you are shepherds and each of you is responsible for his flock..." (Sahih Muslim, 1829) Entrepreneurs, like all Muslims, are reminded of their responsibility and accountability to Allah for their actions, including how they conduct their business. 9 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE HADITH ON ENTREPRENEURSHIP

10. 10 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE PRINCIPLES OF ISLAMIC ENTREPRENEURSHIP Halal and Haram : Islamic entrepreneurship is based on engaging in lawful (halal) activities and avoiding prohibited (haram) ones. This applies not only to the type of business but also to the processes and transactions involved. For example, businesses related to alcohol, gambling, or interest-based financing are forbidden. Justice and Fairness : Entrepreneurs in Islam are expected to be fair in their dealings, whether with customers, suppliers, or employees. Fair pricing, honest marketing, and transparency in transactions are highly valued, with the understanding that unfair practices can harm individuals and society. Risk and Effort (Al- Ghanm bil-Ghurm ) : Islam encourages taking risks and investing effort in business ventures. The principle of Al- Ghanm bil-Ghurm means " gain accompanies liability ," highlighting that profit should be earned through effort and risk-taking rather than through guaranteed returns like interest ( riba ), which is forbidden in Islam. Social Responsibility (Falah) : Entrepreneurship in Islam is not solely focused on profit maximization but also on achieving Falah (success in this life and the hereafter). This involves giving back to society through charitable acts like zakat (almsgiving), providing fair wages, and creating jobs to reduce poverty and inequality. Trust (Amanah) : Trust is a central concept in Islamic entrepreneurship. Entrepreneurs are expected to act with integrity, keeping the trust of their business partners, employees, and customers. This builds a strong reputation and long-term relationships, which are key to sustainable business success. Mutual Cooperation ( Ta'awun ) : Islamic entrepreneurship emphasizes the importance of cooperation and mutual benefit. Entrepreneurs are encouraged to engage in partnerships and collaborations that are beneficial for all parties, promoting a sense of unity and collective well-being.

11. Islamic entrepreneurship is deeply rooted in the rich history of the early Islamic era, where some of the most successful and ethical entrepreneurs were the companions of Prophet Muhammad (SAW). Their business practices were aligned with the principles of justice, fairness, and trust, as taught in the Quran and Sunnah. This history not only highlights their wealth-building efforts but also their generosity, honesty, and commitment to social welfare. Before his prophethood, Prophet Muhammad (SAW) was known for his honest and successful career as a trader. His reputation for integrity, trustworthiness, and fair dealings earned him the title Al-Amin (The Trustworthy). Prophet Muhammad (SAW) worked as a trader for Khadijah bint Khuwaylid, a wealthy businesswoman who later became his wife. His business trips across the Arabian Peninsula demonstrated his skill in commerce and his ability to build strong relationships based on trust. His entrepreneurial style emphasized: Fair dealings: He ensured transparency and fairness in transactions, advocating for both buyers and sellers to avoid exploitation. Ethics over profit: He rejected dishonesty and deceit, teaching that business should be conducted with morality and honesty. Social responsibility: He promoted the idea that wealth should circulate within society to help the poor and needy. 11 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE ISLAMIC ENTREPRENEURSHIP HISTORY

12. Sayyidina Uthman ibn Affan (R.A.), the third Caliph of Islam, was one of the wealthiest and most successful entrepreneurs in early Islamic history. He was known for his large contributions to the Muslim community, especially during times of need. His wealth was accumulated through his astute business acumen in the trade of dates, textiles, and other goods, yet his generosity was even more remarkable. Generosity: Uthman (R.A.) financed the expansion of the Prophet’s mosque and donated wells to the people of Medina, including the famous "Well of Rumah " which he purchased and made available to the public. Philanthropy: He used his wealth to finance the Islamic army in times of war, purchasing supplies and equipment for thousands of soldiers. Business expansion: Despite being extremely wealthy, Uthman (R.A.) conducted his businesses ethically and invested his profits back into the community. 12 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE SAYYIDINA UTHMAN IBN AFFAN (R.A.): THE GENEROUS ENTREPRENEUR

13. Abdul Rahman bin Auf was one of the wealthiest companions of the Prophet Muhammad (SAW) and a prominent figure in the development of Islamic entrepreneurship. After migrating to Medina with nothing, he quickly built a successful business through trade and partnership, refusing charity and choosing to work hard. Resilience: Upon his arrival in Medina after Hijrah, he immediately engaged in trade, starting with small transactions until he amassed substantial wealth. Business principles: He followed Islamic business ethics, ensuring fairness, transparency, and justice in all his dealings. Philanthropy: Like his peers, Abdul Rahman bin Auf was known for his immense charity, financing expeditions, and donating large sums to the community. 13 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE ABDUL RAHMAN BIN AUF: THE SUCCESSFUL ENTREPRENEUR OF MEDINA

14. Abu Darda was another companion of the Prophet Muhammad (SAW) who excelled in trade. However, he later chose a more spiritual path, focusing on religious devotion and piety. He left behind a successful business career to pursue knowledge and faith. Business wisdom: Abu Darda was a highly skilled merchant who made significant profits but later realized the greater importance of spiritual wealth over material wealth. Balancing wealth and spirituality: His life reflects the tension between earning wealth and maintaining spiritual integrity, which is an important theme in Islamic entrepreneurship. 14 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE ABU DARDA: THE WISE TRADER TURNED ASCETIC

15. In modern times, Muslim entrepreneurs continue to contribute to global economies, following Islamic principles in their business practices. Some notable figures include: Prince Al-Waleed bin Talal (Saudi Arabia): A global investor and philanthropist, known for his investments in technology, real estate, and media, while maintaining a focus on Islamic values in business and charity. Sheikh Suleiman Al-Rajhi (Saudi Arabia): Founder of Al-Rajhi Bank, one of the largest Islamic banks in the world, committed to ethical banking and philanthropy. He has donated much of his wealth to various charitable causes. Tan Sri Syed Mokhtar Al- Bukhary (Malaysia): A successful entrepreneur in Malaysia who founded the Albukhary Foundation, focusing on charity, education, and health services for the underprivileged. Dato' Sri Nazir Razak (Malaysia): A prominent banker and the former CEO of CIMB Group, known for his leadership in Islamic finance and banking. 15 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE CONTEMPORARY MUSLIM BUSINESS FIGURES

16. Creativity and innovation are essential drivers of progress and development, and within the Islamic framework, they are encouraged as long as they align with the ethical and moral principles of Islam. The Quran and the teachings of Prophet Muhammad (SAW) emphasize the importance of using intellect, skills, and knowledge to benefit society while adhering to Shariah (Islamic law). Developing creativity and innovation within this framework requires balancing worldly progress with spiritual and moral integrity. 16 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE DEVELOPING CREATIVITY & INNOVATION WITHIN THE ISLAMIC FRAMEWORK

17. Islam encourages creativity and innovation as tools for problem-solving, advancement, and improving the quality of life, provided that these endeavors do not violate Shariah principles. The Quran calls upon humanity to reflect, explore, and learn from the signs of creation: Reflecting on creation : The Quran frequently encourages believers to ponder the creation of the heavens, the earth, and the natural world (Surah Al-Imran, 3:191). This reflection sparks curiosity and innovation. ٱلَّذِينَ يَذْكُرُونَ ٱللَّهَ قِيَـٰمًۭا وَقُعُودًۭا وَعَلَىٰ جُنُوبِهِمْ وَيَتَفَكَّرُونَ فِى خَلْقِ ٱلسَّمَـٰوَٰتِ وَٱلْأَرْضِ رَبَّنَا مَا خَلَقْتَ هَـٰذَا بَـٰطِلًۭا سُبْحَـٰنَكَ فَقِنَا عَذَابَ ٱلنَّارِ ١٩١ ˹ They are˺ those who remember Allah while standing, sitting, and lying on their sides, and reflect on the creation of the heavens and the earth ˹and pray˺, “Our Lord! You have not created ˹all of˺ this without purpose. Glory be to You! Protect us from the torment of the Fire. Seeking knowledge : Islam places a high value on acquiring knowledge and using it to benefit oneself and society (Surah Al- Alaq , 96:1-5). The pursuit of knowledge leads to creativity in various fields, including science, technology, business, and the arts. Innovation for the greater good : Prophet Muhammad (SAW) emphasized innovation that serves society, particularly in economic development, health, and education. This aligns with the Islamic principles of promoting public welfare ( maslahah ) and avoiding harm ( mafsadah ). 17 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE THE ISLAMIC VIEW ON CREATIVITY AND INNOVATION

18. To ensure creativity and innovation are aligned with Islamic teachings, several key principles should be followed: Adherence to Shariah : Any innovation must be consistent with Islamic legal and ethical principles. For example, innovations in finance, technology, or business should avoid elements such as riba (interest), gharar (excessive uncertainty), and haram (prohibited) activities. Ethical responsibility : Creativity in Islam must promote justice, fairness, and compassion. Innovations should serve the collective welfare of society and avoid harm. This principle aligns with the broader objectives of Shariah, which seek to protect religion, life, intellect, lineage, and wealth. Accountability and stewardship : Islamic teachings emphasize that human beings are stewards (khalifah) of the earth. This concept encourages sustainable and responsible innovation, especially in fields like environmental science, technology, and resource management. Integration of spirituality and morality : Innovation in Islam is not only about material progress but also spiritual development. Creative endeavors should nurture the soul, promote ethical behavior, and deepen one’s connection to God. 18 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE PRINCIPLES GUIDING CREATIVITY AND INNOVATION IN ISLAM

19. To foster creativity and innovation within an Islamic context, several strategies can be employed: Education and knowledge development : Islamic history is rich with examples of scientific and intellectual advancements during the Golden Age of Islam. Institutions of learning, such as madrasahs and modern Islamic universities, play a critical role in fostering innovation by integrating religious studies with contemporary fields like science, technology, and the arts. Islamic entrepreneurship : Encouraging entrepreneurship within the framework of Islamic finance and ethics is a powerful way to stimulate creativity and innovation. Islamic entrepreneurship promotes ethical business practices, risk-sharing, and mutual cooperation ( Musyarakah and Mudharabah contracts), which create environments conducive to innovation. Technology and ethical innovation : Technology is one of the most dynamic fields for creativity and innovation. Within the Islamic framework, technological innovations should be directed toward ethical outcomes, such as improving healthcare, education, and social justice, while maintaining ethical boundaries in areas like artificial intelligence, biotechnology, and digital finance. Islamic arts and culture : The Islamic tradition has a rich heritage of artistic innovation, from calligraphy to architecture. Encouraging contemporary artistic expression while staying true to Islamic values can promote creativity in modern Muslim societies. 19 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE ENCOURAGING CREATIVITY AND INNOVATION WITHIN THE ISLAMIC FRAMEWORK

20. 20 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE CASE STUDIES OF ISLAMIC INNOVATION Islamic Finance : The development of Islamic banking and finance is an example of innovation guided by Islamic principles. Islamic financial products, such as sukuk (Islamic bonds), takaful (Islamic insurance), and profit-sharing investment schemes ( Mudharabah and Musharakah ), have allowed Muslims to engage in financial markets while adhering to Shariah laws. Green Technology in the Middle East : Several Muslim-majority countries are investing in renewable energy, sustainability, and green technology, motivated by the Quranic principles of environmental stewardship. For example, Masdar City in the UAE is a hub for sustainable innovation, using solar energy and promoting eco-friendly living. Islamic Apps and Technology : The rise of technology has also seen the development of innovative Islamic apps, such as those for prayer times, Quranic study, and zakat calculation. These innovations allow Muslims to integrate their faith into daily life more seamlessly.

21. Entrepreneurship is strongly encouraged in Islam, provided it adheres to ethical guidelines derived from the Quran and Hadith. Honesty, fairness, transparency, and social responsibility are key values that should guide every entrepreneurial endeavor. By following these principles, Islamic entrepreneurs can contribute to both economic development and social well-being, while earning the pleasure of Allah (SWT). Entrepreneurship in Islam is about creating value in an ethical and responsible way. It encourages individuals to innovate, take calculated risks, and pursue business opportunities, all while adhering to Islamic values such as justice, trust, and social responsibility. The ultimate goal is not just personal financial success but also contributing to the welfare of society and gaining spiritual rewards in this life and the hereafter. Islamic entrepreneurship has a long and rich history, with figures like Prophet Muhammad (SAW), Sayyidina Uthman ibn Affan (R.A.), Abdul Rahman bin Auf, and Abu Darda providing foundational examples of how to balance ethical business with social responsibility. These early entrepreneurs set the standards for modern Muslim business figures who continue to uphold these values while navigating contemporary global markets. Islamic entrepreneurship remains rooted in the principles of fairness, trust, and community welfare, ensuring that wealth is generated ethically and contributes to societal good. Developing creativity and innovation within an Islamic framework is not only possible but also essential for progress in the modern world. Islam provides the ethical guidelines needed to ensure that innovations benefit humanity while staying true to moral and spiritual values. By encouraging knowledge, ethical entrepreneurship, and technological advancements that are Shariah-compliant, Muslim societies can foster a culture of innovation that contributes positively to both the material and spiritual well-being of the global community. 21 BIMM5043 - ENTREPRENEURSHIP FROM ISLAMIC PERSPECTIVE CONCLUSION