Negotiation in Islamic financial system: developing a Shariah-compliant negotiation model

A number of organizations have adopted the Islamic system of management to manage their organizations. Those Islamic organizations negotiate and deal in order to satisfy their interest and meet their objectives. Hence, it is important to know the Shariah principles, which they execute in their negotiation with their various customers and stakeholders. The negotiation process and outcome have been largely studied applying different conventional perspectives and value systems. However, while the extant studies on negotiation have exhaustively focused on viewpoints that are mainly informed by western value systems, it is imperative to explore the possibility of the conceptualization and practice of negotiation from the Islamic perspective. As such, this study explores and identifies the concept, principles and practices of negotiation from an Islamic perspective. Additionally, this study
proposes a Shariah-compliant negotiation model through a qualitative research design. A series of in-depth face-to-face interview were conducted among 20 informants from four different expert groups namely; Muftis, Academicians, Practitioners and Shariah Board Members of Islamic Banks. Content analysis was
used via thematic Data analysis with the assistance of NVivo 8 software. Findings
show that negotiations from the Islamic viewpoint provide three platforms of
disagreements; reconciliation (Sulh), discussion (Shura) and communication. These platforms are based on six core principles, which are Qur’an and Sunnah compliance, justice, credibility, flexibility, information disclosure and relationship. This study also finds that obtaining spiritual satisfaction is the main purpose for adopting the Islamic approach by Islamic organizations in their negotiation conducts. Furthermore, this study recommends a Shariah-compliant negotiation model as a
potential guide for conducting negotiations among Islamic organizations. Finally, this study contributes to the body of knowledge by providing a systematic framework, which provides insights for Islamic organizations on how to conduct negotiations with a proper Islamic approach.