CSR in Sharia Theory Perspective

Dwi Nita Aryani and Imama Zuchroh

Chapter 5 in Islamic Accounting and Finance:A Handbook, 2023, pp 151-172 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The implementation of corporate social responsibility (CSR) is examined from various perspectives, as well as the distinctive features of some theories. CSR is a kind of action for communicating with stakeholders to show that companies pay attention to the environment, nature, and society. The theories relating to CSR implementation can be discussed from different perspectives. Agency theory focuses on the relationship between agent and principal and may give rise to conflict of interest. Legitimacy theory places the public as its responsibility. Disclosing information about social and environmental performance is a path for companies to maintain or regain their legitimacy in the society’s point of view. Meanwhile, entity theory focuses only on the satisfaction of the shareholders, hence the company activities are only directed to meet the welfare of the owners. Enterprise theory recognizes the responsibility to the owners and broader stakeholder groups. However, Sharia enterprise theory pays attention in two directions, consisting of vertical accountability to God and the horizontal accountability in direct and indirect stakeholders for humans, the environment, and society.

Keywords: Islamic Accounting; Islamic Finance; Islamic Banking; AAOIFI (search for similar items in EconPapers)
JEL-codes: G34 M41 (search for similar items in EconPapers)
Date: 2023
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