International Journal of Social Science Research (IJSSR)

Synthesizing Shariah Governance and Stakeholder Theory: A Holistic Framework

The integration of ethical governance models is increasingly important for Islamic financial institutions (IFIs) seeking legitimacy in both religious and corporate domains. This study addresses the gap between Shariah governance—rooted in Islamic legal and ethical principles—and stakeholder theory, which emphasizes the inclusive consideration of all parties affected by organizational decisions. The research is grounded in the growing recognition that Islamic finance must evolve beyond compliance to embody broader ethical and social responsibilities. The primary purpose of this research is to synthesize Shariah governance and stakeholder theory into a unified, holistic framework that enhances the accountability, transparency, and ethical integrity of IFIs. This study adopts a qualitative methodology, employing a systematic literature review and content analysis of existing governance models, regulatory standards, and scholarly works from both Islamic jurisprudence and stakeholder theory. The data comprises scholarly articles, governance codes from key Islamic finance jurisdictions, and case studies of leading IFIs. The synthesis reveals complementary principles between the two frameworks, such as justice, transparency, and protection of rights, which can be leveraged to construct a more inclusive governance model. The major findings indicate that stakeholder engagement can reinforce the objectives of Shariah (Maqasid al-Shariah), particularly in promoting social welfare and ethical business conduct. The proposed framework repositions the Shariah Supervisory Board as both a religious and ethical stakeholder and advocates for a broader definition of stakeholders in Islamic finance. Ultimately, the study offers practical implications for regulators and practitioners to implement a governance model that is both Shariah-compliant and stakeholder-inclusive. Keywords Shariah Governance, Stakeholder Theory, Shariah, Corporate Governance, Ethics, Accountability, Islamic Jurisprudence