Co-Creation of Non-Economic Values in Islamic Banking: A New Frontier in Service Science
The purpose of this paper is to examine co-creation of non-economic values in Islamic banking services and their significance for service science by comparing Islamic and conventional banking services. Although many scholars have discussed co-creation of values in services, most of them have focused on only economic values.
Following Sharia (Islamic principles that are based on Qur’an and Sunnah) traditions, Islamic banking is more concerned with such non-economic values as well-being, partnership, fairness, trust, and justice, than such economic values as money in terms of interest. Therefore, it may be more sustainable and suitable for today’s unpredictable socio-economic environments.
We also argue that Islamic banking is essentially a value co-creation business model that fits better with the so-called Service-Dominant Logic (SDL) than conventional banking. This paper explores a new frontier of value co-creation in services, thereby contributing to further development of service science.
[1] H. Shahid, R. Rehman, G. S. K. Niazi, and A. Raoof, “Efficiencies
comparison of islamic and conventional banks of Pakistan,”in Int. Res. J.
of Finan. and Econ., pp. 24-42, 2010.
[2] M. S. Rosenbaum, C. Corus, A. L. Ostrom, L. Anderson, R. P. Fisk, A. S.
Gallan, M. Giraldo, M. Mende, M. Mulder, S. W. Rayburn, K. Shirahada,
and J. D. Williams, “Conceptualisation and aspirations of transformative
service research,” J. of Res. for Consumers, pp. 1-6, 2011.
[3] R. Masruki, N. Ibrahim, E. Osman, and H. A. Wahab, “Financial
performance of Malaysian founder Islamic banks versus conventional
banks,” J. of Bus. and policy Res., vol. 6, pp. 67-79, Sept. 2011.
[4] S. P. Parashar, and J. Venkatesh, “How did Islamic banks do during
global financial crisis?,”Banks and Bank Syst.,vol. 5, pp. 54-62, 2010.
[5] A. Ahmad, K. Rehman, and N. Safwan, “Comparative study of Islamic
and conventional banking in Pakistan based on customer satisfaction,”Afr.
J. Bus. Manag.,vol. 5, pp. 1768-1773, Mar. 2011.
[6] S. L.Vargo, andLusch, R. F.Lusch. (2004).Evolving to a new dominant
logic for Mark. J. of Mark., (Online). Available: http://dx.doi.org/
10.1509/jmkg.68.1.1.24036
[7] P. P. Maglio,, J. Kreulen, S. Srinivasan, and J. Spohrer, “Service systems,
service scientists, SSME, and innovation,”Comm.of the ACM, vol. 49, pp.
81–85, Jul.2006.
[8] M. Ariff, “Islamic Banking, ”Asian-Pacific Economic Literature,
University of Malaya, vol. 2, pp. 46-62,1988.
[9] M. Hanif, “Difference and similarities in islamic and conventional
banking,” Int. J. of Bus.andSocial Sci., vol. pp.166-175, 2011.
[10] F. Khan, “How ‘Islamic' is islamic banking,”J. of Econ. Behavior and
Organization, vol.76, pp. 805-820, 2010.
[11] T. S. Usmani, “An Introduction to Islamic Finance,”MaktabaMa’arif Al
Quran, Karachi, Pakistan, 2002.
[12] A. A. Al-smadi, F. Hamdan, M. A. Khalid, “Islamic banking vs
conventional banking, during the global financial crisis: Malaysia as a
Case.”J. of Islamic and Human Advanced Res., vol. 3, pp. 27-40, 2013.
[13] B. Maali, P. Casson, and C. Napier, “Social reporting by islamicbanks, ”ABACUS, vol. 42, pp.266-289, 2006.
[14] R. Haniffa, and M. Hudaib, “Exploring the ethical identity of Islamic banks via communication in annual reports,” J. of Bus. Ethics, vol.76, pp. 97-116, 2007.
[15] M. U. Zubairu, B. O. Sakariyau, and K. C. Dauda, “Social reporting practices of Islamic banking Saudi Arabia, ”Int.J. of Bus.and Social Sci., vol. 2, pp. 97-116, 2011.
[16] Z. M. EL-Gawady, “Possibility of cooperation between Islamic banks and conventional banks,” Misr university for Science and Technology, Giza, Egypt, Rep., Oct. 2008. Available: http://www.must.edu.eg/Publications/Business_Res4.pdf
[17] M. M. Ashraf, Z. Rehman, “The performance analysis ofislamic and conventional banks: The Pakistan’s perspective,” J. of Money, Investment and Banking, vol. 22, pp. 99 – 113, 2011.
[18] M. Hanif, and A. Iqbal, “Islamic financing and business framework: A survey,’ European J. ofSocial Sci., vol. 15, pp. 475-489, 2010.
[19] A. A. Ashfaq, K. Rehman, and M. I. Saif, “Islamic banking experience of Pakistan: Comparison between Islamic and conventional banks,” Int. J. of Bus. and Manage. Vol.5, 2010
[1] H. Shahid, R. Rehman, G. S. K. Niazi, and A. Raoof, “Efficiencies
comparison of islamic and conventional banks of Pakistan,”in Int. Res. J.
of Finan. and Econ., pp. 24-42, 2010.
[2] M. S. Rosenbaum, C. Corus, A. L. Ostrom, L. Anderson, R. P. Fisk, A. S.
Gallan, M. Giraldo, M. Mende, M. Mulder, S. W. Rayburn, K. Shirahada,
and J. D. Williams, “Conceptualisation and aspirations of transformative
service research,” J. of Res. for Consumers, pp. 1-6, 2011.
[3] R. Masruki, N. Ibrahim, E. Osman, and H. A. Wahab, “Financial
performance of Malaysian founder Islamic banks versus conventional
banks,” J. of Bus. and policy Res., vol. 6, pp. 67-79, Sept. 2011.
[4] S. P. Parashar, and J. Venkatesh, “How did Islamic banks do during
global financial crisis?,”Banks and Bank Syst.,vol. 5, pp. 54-62, 2010.
[5] A. Ahmad, K. Rehman, and N. Safwan, “Comparative study of Islamic
and conventional banking in Pakistan based on customer satisfaction,”Afr.
J. Bus. Manag.,vol. 5, pp. 1768-1773, Mar. 2011.
[6] S. L.Vargo, andLusch, R. F.Lusch. (2004).Evolving to a new dominant
logic for Mark. J. of Mark., (Online). Available: http://dx.doi.org/
10.1509/jmkg.68.1.1.24036
[7] P. P. Maglio,, J. Kreulen, S. Srinivasan, and J. Spohrer, “Service systems,
service scientists, SSME, and innovation,”Comm.of the ACM, vol. 49, pp.
81–85, Jul.2006.
[8] M. Ariff, “Islamic Banking, ”Asian-Pacific Economic Literature,
University of Malaya, vol. 2, pp. 46-62,1988.
[9] M. Hanif, “Difference and similarities in islamic and conventional
banking,” Int. J. of Bus.andSocial Sci., vol. pp.166-175, 2011.
[10] F. Khan, “How ‘Islamic' is islamic banking,”J. of Econ. Behavior and
Organization, vol.76, pp. 805-820, 2010.
[11] T. S. Usmani, “An Introduction to Islamic Finance,”MaktabaMa’arif Al
Quran, Karachi, Pakistan, 2002.
[12] A. A. Al-smadi, F. Hamdan, M. A. Khalid, “Islamic banking vs
conventional banking, during the global financial crisis: Malaysia as a
Case.”J. of Islamic and Human Advanced Res., vol. 3, pp. 27-40, 2013.
[13] B. Maali, P. Casson, and C. Napier, “Social reporting by islamicbanks, ”ABACUS, vol. 42, pp.266-289, 2006.
[14] R. Haniffa, and M. Hudaib, “Exploring the ethical identity of Islamic banks via communication in annual reports,” J. of Bus. Ethics, vol.76, pp. 97-116, 2007.
[15] M. U. Zubairu, B. O. Sakariyau, and K. C. Dauda, “Social reporting practices of Islamic banking Saudi Arabia, ”Int.J. of Bus.and Social Sci., vol. 2, pp. 97-116, 2011.
[16] Z. M. EL-Gawady, “Possibility of cooperation between Islamic banks and conventional banks,” Misr university for Science and Technology, Giza, Egypt, Rep., Oct. 2008. Available: http://www.must.edu.eg/Publications/Business_Res4.pdf
[17] M. M. Ashraf, Z. Rehman, “The performance analysis ofislamic and conventional banks: The Pakistan’s perspective,” J. of Money, Investment and Banking, vol. 22, pp. 99 – 113, 2011.
[18] M. Hanif, and A. Iqbal, “Islamic financing and business framework: A survey,’ European J. ofSocial Sci., vol. 15, pp. 475-489, 2010.
[19] A. A. Ashfaq, K. Rehman, and M. I. Saif, “Islamic banking experience of Pakistan: Comparison between Islamic and conventional banks,” Int. J. of Bus. and Manage. Vol.5, 2010
@article{"International Journal of Business, Human and Social Sciences:65033", author = "Amna Javed and Katsuhiro Umemoto and Youji Kohda", title = "Co-Creation of Non-Economic Values in Islamic Banking: A New Frontier in Service Science", abstract = "The purpose of this paper is to examine co-creation of non-economic values in Islamic banking services and their significance for service science by comparing Islamic and conventional banking services. Although many scholars have discussed co-creation of values in services, most of them have focused on only economic values.
Following Sharia (Islamic principles that are based on Qur’an and Sunnah) traditions, Islamic banking is more concerned with such non-economic values as well-being, partnership, fairness, trust, and justice, than such economic values as money in terms of interest. Therefore, it may be more sustainable and suitable for today’s unpredictable socio-economic environments.
We also argue that Islamic banking is essentially a value co-creation business model that fits better with the so-called Service-Dominant Logic (SDL) than conventional banking. This paper explores a new frontier of value co-creation in services, thereby contributing to further development of service science.
", keywords = "Value co-creation, Islamic banking, Non-economic values, Service science.", volume = "7", number = "9", pages = "2547-8", }
