Customer‐centric corporate social responsibility: A framework for Islamic banks on ethical efficiency

Abstract

Purpose

The purpose of this paper is to investigate customer‐centric corporate social responsibility (CSR) in Islamic banks of Bangladesh, Malaysia and the Arabian Gulf Region. The new framework is found from the incomplete link between managerial motivation and their actual involvement with CSR activities.

Design/methodology/approach

The study uses annual reports of 16 Islamic banks from three regions. Using content analysis method, the study produces an ethical identity index on eight dimensions. The average index scores are ranked to get a view of the importance given by Islamic banks to the path of social responsibility.

Findings

In this study, the customer‐centric CSR framework assumes that there are two layers of CSR involvement in Islamic banks. The upper layer assures the commitment towards Allah (SWT) by operating under Islamic Shari'ah. The bottom layer ensures the commitment towards customers, employees and society. The reports of Islamic banks show that the selected banks are too customer centric and efficiency driven. However, that efficiency is targeted at the cost of sacrificing Shari'ah norms. Their commitments to basic Islamic rules fall far behind the average.

Research limitations/implications

The study uses content analysis of the annual report to identify CSR involvement of the Islamic banks. There are various issues related to CSR and corporate management that are not reported in annual reports. Moreover, disclosure norms and regulation also have an influence on reporting standards. Thus, this study is limited to what is found in the reports only.

Originality/value

The study contributes to the existing literature on customer‐centric CSR and customer‐centric marketing. There is evidence that the findings from this study are consistent with other studies. Islamic banks are becoming customer centric because of the competition from conventional banks. However, they must not forget the very essence of the establishment of these banks which is the spiritual freedom based upon sole submission to Allah (SWT).

Citation

Rashid, M., Abdeljawad, I., Manisah Ngalim, S. and Kabir Hassan, M. (2013), "Customer‐centric corporate social responsibility: A framework for Islamic banks on ethical efficiency", Management Research Review, Vol. 36 No. 4, pp. 359-378. https://doi.org/10.1108/01409171311314978