Co-Creation of Non-Economic Values in Islamic Banking: A New Frontier in Service Science

Authors: Amna Javed, Katsuhiro Umemoto, Youji Kohda

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.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1087656

References:

[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