Chapter 2: Framework for Measuring the Impact of Islamic Corporate Governance on Sustainable Growth

Islamic corporate governance (CG) plays a significant role in ensuring the sustainability of organizations’ growth by aligning it with the objectives of Shariah. It promotes Shariah values and fosters a culture of trust that safeguards against wastage, extravagance, fraud, and misuse of power by those in governance. This chapter reviews Islamic CG, highlighting its differences from conventional CG and its relevance to sustainable growth. The principle of socially responsible behavior in religious-based economic systems is employed to interpret how contemporary organizations should be governed, and the objectives of stakeholders are considered in business operations and spiritual obligations. The Islamic economic model has great potential to encourage a unique perspective on the role of stakeholders, which is implemented through the inclusive process of CG. Responsible investing is based on the ethical core principles of faith and connection between capitalism and religions. The Islamic world distinguishes between capitalism and material success and capitalism and moral management. The study establishes the impact of Islamic CG on the dynamics of sustainable growth and development of a company from a wide array of measures so as to overshadow corporate growth, employees’ involvement, ethical and transparency issues, tackling macroeconomic issues to promote smooth state balance sheet formation, and much more. Behavioral CG relies upon credible ethical practices that align all stakeholders and shareholders in a company’s business, a sound corporate infrastructure, social cooperation, and a high-quality legal framework.