Islamic social business for sustainable development and subjective wellbeing

Purpose - The purpose of this paper is to report that the social business model has emerged to mitigate the failure of free-market capitalism driven by self-interest in creating social value. It shows how social business contradicts with free-market capitalism while being compatible with Islamic moral economy due to the axiomatic differences between the two economic systems. Design/methodology/approach - The paper follows conceptual, axiomatic and theoretical approach to show how the social business model contradicts with free-market capitalism, but is compatible with Islamic moral economy. The paper provides a theoretical framework for Islamic social business based on an Islamic human and social development perspective. The paper first discusses the failure of free-market capitalism and the emergence of social business in the capitalist system. It then defines Islamic social business and lays out its axiomatic foundation based on the Islamic worldview. It also presents Islamic financial instruments and funds for social business. Finally, it makes a case for sustainable socioeconomic development and subjective well-being within the Islamic development paradigm. Findings - The paper shows that a cosmetic change to capitalism is not sufficient for enabling the social business model to take the main stage in the free-market system. There is a need for a new paradigm of reality, truth, telos and human nature to support social business. Tawhidi paradigm can be such alternative. The paper makes a strong case for social business from an Islamic worldview. Particularly, certain economic axioms within the Tawhidi anthropology, teleology and axiology provide intrinsic causes for pursuing such business model. The multi-dimensional nature of humans from the Tawhidi anthropology sets the intrinsic foundation for social business. Indeed, although the social business model is new to the West, it has been practiced in certain forms in the Muslim world throughout history. Zakat, sadaqah, and qard hasan can be used to support social business in addition to some Islamic banking instruments. The paper suggests that Muslim countries should embrace the social business model for sustainable development and greater subjective well-being. Research limitations/implications - The paper is purely theoretical. Future studies might shed light on the issue through empirical evidence. Practical implications - The paper is likely to enhance the interest in social business in the Muslim world. Social implications - The paper has potential to lead the creation of social value through dissemination of the social business model. Originality/value - The paper contributes the Islamic moral economy doctrine by making a strong case for Islamic social business.