Islamic performance measurement system: driving firms towards virtuous wealth creation

This study explores Islamic principles to develop a performance measurement system (PMS) that motivates the behaviour of firms. Against the backdrop of the finance and corporate sector riddled with controversies and crises over the past decades, the main motivation of this study is to drive businesses towards higher ethical standards. This study explores the role of PMS to drive ethical behaviour of firms internally from within, using a religious perspective. The purpose of this study is two-fold; the development and validation of a PMS based on Islamic principles, and an assessment of firms using this new IPMS framework. The findings of the quantitative study comparing the performance of Shariah compliant (SC) and non-Shariah compliant (NSC) companies report mixed results. This suggests that SC firms do not necessarily perform better than NSC firms according to Islamic principles, subsequently proposing a revisit of the current Shariah screening methodology implemented by regulators.