Value co-creation in sharariah-compliant banking : a Saudi Arabian case study

الملخص EN

This paper argues that Shariah-compliant Islamic banking is essentially a value co-creation business model that illustrates attributes associated with the emerging service-dominant logic paradigm.

The underpinning Shariah philosophy of minimising ‘usage’ of one party by another results in the sharing of profit, losses, risk and the promotion of interest-free principles.

Islamic banks that follow Shariah traditions endeavour to co-create value with their business and corporate customers in a manner that would resonate with the proponents of service-dominant logic.

The authors argue that Shariah-compliant business models may be more appropriate for today’s volatile and socio-economic climate, evidencing their potential via business case examples.

Shariah-compliant Islamic financing, such as Sukuk (Islamic bonds), istiÎni (construction finance), murabahah (commodity trade finance), murarabah (finance trusteeship), musharakah (joint venture) and ijarah (Islamic leasing), is generally based on a business relationship and partnership approach.

Such approaches are now gaining popularity and offer those engaged in service exchange the opportunity to co-create value or at least mutual benefit.