American Univesity of Beirut

The Impact of Religion on Decision-Making Within Religious Family Firms in the MENA Region

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​It's no secret that in the MENA region, religion continues to predominate, affecting everyday life from education to social relationships to workplaces. Religion has taken a great toll in Lebanon and we see the influence of religious beliefs on so many different levels. Recent research by AUB, OSB professors explores the impact of religion on decision making in family business in Lebanon under the headline “How Religion Shapes Family Business Ethical Behaviors: An Institutional Logics Perspective" published in the Journal of Business Ethics. The research findings revealed that, although religion has an impact, other logics such as business and family continue to be resonant.

The research, conducted by Dr. Ramzi Fathallah, Dr. Yusuf Sidani and Dr. Sandra Khalil, focuses on the tools required to make religious logic and other logics converge, whilst keeping the interest of the business at the core of any business decision being made. The research was based on interviews with 30 active family members of 13 religious family firms (six Muslim and seven Christian). All participants strongly self-identified themselves with one of the two religions.

Based on the analysis of how religion is interpreted whenever these firms considered ethical issues, religion played a critical role in shaping the behaviors of the executives and decision makers in different ways. Although the business or family logic was more dominant in specific situations, religion was always preserved in a fluid way and was present in assessing ethical issues in those family firms.

 The way religion intervenes with business logic can take different forms depending on the profile of the decision makers, the type of emerging situation, and the sought objective: 

Three main functions that highlight the fluidity of religion are (1) transcending, (2) separating and reordering, and (3) combining. The religion logic, despite its apparent rigidity, became versatile when issues were contested across different logics.

Transcending function
When the religion logic dominated other logics, it was transcending. For instance, there were times when decision-makers chose to comply and abide unconditionally with religion. One main manifestation of this in Muslim family firms, for example, is when some family businesses forego certain business deals when these do not conform with the Shari'a law. Both groups (Muslim and Christian) linked such religious devotion to positive business outcomes, hence reinforcing the importance of religion.

Separating and reordering
In some cases, religious family firms faced situations where an action required contradicts certain religious beliefs or practices. And it was in such cases that there was dissonance between what decision-makers are forced to do or accept versus what they ought to do based on their religious beliefs. What they did is they separated business from religion; acknowledging how business logic is antagonistic to religious values. Protagonists tried to compensate for those situations. For example, one executive explains how he compensated for paying a bribe: “I try to absolve myself by giving [money] to charity."

The researchers found that more often than not executives choose to combine the religious logic with other logics. The study found that religion logic was in harmony with other logics and sometimes provided a balance between contesting logics. An executive explains “being too emotional can drive you downhill, and the mind that only calculates based on facts can be too cruel... this is one of the blessings of the Holy Spirit that guides people and teaches them. It disciplines our heart and mind and guides us."

Although Muslim and Christian family firms were influenced by relatively similar dynamics between religion, business and family logics, the researchers found that religion had a rule-based impact in Muslim firms compared to principle-based impact in Christian firms. For example, in Muslim family firms, religion was interpreted as laws that must be obeyed to please God and avoid incurring some kind of punishment from Him. An executive shares: “when we refuse taking financial leverage, the MBA logic will define it as a missed opportunity. We believe it is an opportunity to please God; another opportunity will come along… I can't say this in the MBA school…they won't understand."

On the other hand, in Christian firms, religion was interpreted as providing general guidance to executives. One executive shares this saying: “In Essentials Unity, In Non-Essentials Liberty."

In family firms that are religious, religion impacts ethics, however, in no rigid way. Based on years of research, Dr. Sidani communicates, “When executives find themselves in a position where the rule of religion is impacting the business, a conversation should take place in the company." This sets the general tone for all executives who are looking to join firms that are dominated by religion in Lebanon and across the region. The relationship between religion and business is not binary, executives tend to find ways to walk between the lines, in ways that reconcile both the business logic and the religious logic. Click here to read more on the topic.​​​​​

(Interview and article by Dana Abed)

© 2020 American University of Beirut, Olayan School of Business. All rights reserved.

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