Download Co-Created Value: An Islamic (Shariah) Banking

Co-Created Value: An Islamic (Shariah) Banking
Perspective
A research paper to be presented at the:
Service Science and Innovation Doctoral Colloquium
Staffordshire University
22-23 March, 2010
By:
Samer Jan, BSc, MBA, MSc.
Doctoral Researcher, University of Glasgow,
Department of Management,
[email protected]
Research Objective and Aim:
The objective of this paper is to explore the extent to which
Islamic (Shariah) banking practices, such as Mudaraba
and Musharaka, can exhibit characteristics and
underpinning philosophies associated with the services
dominant logic (S-D Logic) movement.
Two Forms of Islamic Finance
1. Mudharaba is essentially a finance agreement between
a capital provider (bank) and a business owner
In this agreement any profit made in business activities will
be shared between the bank and the business owner
based on an agreed ‘ratio’ However, in the event of loss the
‘capital provider will bear all the losses and the profit
sharing continues until the loan is repaid. In this agreement
the capital provider (bank) is involved in the management
of the project or has a voting representative in board
meetings
2. Musharaka (partnership or joint venture) is another
widely applied Islamic mode of finance, which in Arabic
means (sharing). This form of Islamic financing refers to a
joint business partnership in which all partners (share the
profit and loss according to a specific ratio)
Moreover, in this agreement two or more parties combine
either their capital or labour together
Why should we consider such modes of Islamic
finance agreements ?
- Financial challenges
- Profit , credit and liquidity issues
- Risk and uncertainties
Could Mudaraba and Musharaka finance agreements help
in fostering partnerships and business relationships ? Can
we argue that this form of partnership and business
agreement are features of S-D logic and may help drive
value co-creation between business parties ?
Well any ideas ??
Well we believe so based on several empirical business
examples driven from the Saudi banking sector. These
examples are still in the publication phase !
Challenges and Areas of Discussion:
Theoretical development
Framework (conceptual model)
Variables and Constructs
Publishing
Thank you