Corporate Social Responsibility In Islamic Banking Institutions In Aceh: Analysis Of Criteria And Perception

Abstract

The concept of corporate social responsibility (CSR) emerged in the West in 1970s’ and had become an emerging issue of discussion among the researchers. The concept of CRS was initiated on humanitarian grounds which can be traced back to human norms, and culture in the West. It becomes questionable when the same concept, based on western paradigm, is adopted and implemented for the Islamic banking institutions. Islamic banks are assumed to follow their own worldview concept of welfare rather to rely on conventional CRS concept. This paper attempts to identify the alternate concept of CSR in the Islamic perspective. Notwithstanding, the alternate concept of CRS for the Islamic banking institutions, the study also investigates customers’ perceptions of the Islamic Banks in Aceh towards CSR. The study is divided into two phases. The first phase of the study is theoretical and based on library materials. Content analysis method has been used to investigate the material and deduce results. The second phase is based on interviews with experts and 400 customers’ responses about their perceptions regarding CSR in Islamic banking Institutions (IBIs) in Aceh. The findings of the study can be summarized as: there is no direct verse or tradition of the holy prophet regarding CSR however, there are plenty verses which show that individuals and institutions are responsible for any damage they caused to the society or environment. Findings of the study suggest that the concept of CSR is different from traditional paradigm. The CSR concept in Islam is practiced in three areas of responsibility; first, responsibility to God second, responsibility towards the people, and third, responsibility to the environment. These three levels are supported by the basic principles of monotheism (tauhid), the caliphate (khalifah), justice, brotherhood (ukhuwwah) and maslahah. The study used six criteria based on 34 items to measure CSR performance of the IBIs. These are namely; Syariah compliance, equality, working responsibility, the guarantee of prosperity, the guarantee of environmental sustainability and charity for preservation of virtue. Findings of the second phase of the study indicate that the customers perceptions regarding the Syari‘ah banking CSR practices in Aceh are high. The customers make Syari‘ah compliance criteria as the main criteria in the selection of the IBIs.

DOI: 10.5901/jesr.2014.v4n2p390