CASE ANALYSIS #2 Islamic Capitalism in Turkey For years now Turkey has been lobbying the European Union to allow it to join the free trade block as a member state. If the EU says yes, it will be the first Muslim state in the Union. Many critics in the EU worry that Islam and Western style capitalism do not mix well, and that as a consequence, allowing Turkey into the EU would be a mistake. However, a close look at what is going on in Turkey suggests that this view may be misplaced. Consider the area around the city of Kayseri in Central Turkey. Many dismiss this poor, largely agricultural region of Turkey as a non-European backwater, far removed from the secular bustle of Istanbul. It is a region where traditional Islamic values hold sway. And yet, it is also a region that has produced so many thriving Muslim enterprises that it is sometimes called the “Anatolian Tiger.” Businesses based here include large food manufacturers, textile companies, furniture manufacturers, and engineering enterprises, many of which export a substantial percentage of their production. Local business leaders attribute the success of companies in the region to an entrepreneurial spirit that they say is part of Islam. They point out that the Prophet Muhammad, who was himself a trader, preached merchant honor and commanded that 90 percent of a Muslim's life be devoted to work in order to put food on the table. Outsider observers have gone further, arguing that what is occurring around Kayseri is an example of Islamic Calvinism, a fusion of traditional Islamic values and the work ethic often associated with Protestantism in general, and Calvinism in particular. Within Kayseri, the influence of Islam is plain to see. Many companies set aside rooms and time for 15-minute prayer breaks. Most of the older businessmen have been to Mecca on the Haji, the pilgrimage that all Muslims are meant to make at least once in a lifetime. Few of the cafés and restaurants in Kayseri serve alcohol, and most women wear a headscarf. At the Kayseri sugar factory, one of the most profitable in the region, a senior manager claims that Islam has played a large part in improving the profitability of the enterprise. For a long time the factory bought most of its sugar beets from a single monopoly supplier, who charged a high price. But because Islam preaches equal opportunity in business, managers at the sugar factory decided that the Islamic thing to do was diversify the supply base and encourage small producers to sell beets to them. Today the factory buys sugar beets from 20,000 small growers. Competition between them has lowered prices and boosted the factory's profitability. The same manager also noted that “If you are not a good Muslim, don't pray five times a day and don't have a wife who wears a headscarf, it can be difficult to do business here.” However, not everyone agrees that Islam is the driving force behind the region's success. Saffet Arslan, the managing director of Ipek, the largest furniture producer in the region (which exports to more than 30 countries), claims that another force is at work—globalization. According to Arslan, over the last three decades local Muslims who once eschewed making money in favor of focusing on religion are now making business a priority. They see the Western world, and Western capitalism, as a model, not Islam, and because of globalization and the opportunities associated with it, they want to become successful. At the same time, Arslan is a practicing Muslim who has built a mosque in the basement of Ipec's headquarters building so that people can pray while at work. If there is a weakness in the Islamic model of business that is emerging in places like Kayseri, some say it can be found in traditional attitudes toward the role of women in the workplace, and the low level of female employment in the region. According to a report by the European Stability Initiative, the same group that holds up the Kayseri region as an example of Islamic Calvinism, the low participation of women in the local workforce is the Achilles heel of the economy, and it may stymie the attempts of the region to catch up with the countries of the European Union. Answer the following questions: a. Can you see anything in the values of Islam that is hostile to business? b. What does the experience of the region around Kayseri teach us about the relationship between Islam and business? c. What are the implications of Islamic values toward business for the participation of a country like Turkey in the global economy?