Strategic Analysis of Home Industry Development based on Islamic

Business Ethics Perspective: Case Study at Kaos Hasby, Ponorogo,

East Java 2018

Fian Mahdy Akbar, Abdul Latif and Azidni Rofiqo

Department of Islamic Economics, Economics and Management Faculty, University of Darussalam Gontor, Indonesia

Keywords: Home Industy, Islamic Business Ethics.

Abstract: Industry is one of human economic activities that has a strategic and future role as a source of income for

the community to meet their daily needs. Islam supports business in the form the form of trading, as well as

buying and selling, as long as there is no element of untrust in it. Islamic business ethics is a set of

principles for business management based on the Qur'an, hadith, and jurisprudential laws. However, there

are a lot of entrepreneurs who do not know about this. This study suggested to determine the home industry

development strategy in “Kaos Hasby” Ponorogo. Also to find out the ethical application of Islamic

business in the “Kaos Hasby” home industry. The descriptive qualitative research methods are used in this

study method. Data collection techniques are carried out by triangulation. The type of interview used a

structured interview by preparing the needed. The results showed that the home industry development

strategy in “Kaos Hasby” are focused on business transaction, business cooperation, business capital, and

business responsibility. As for the ethical application of Islamic business in the “Kaos Hasby” home

industry, it still has not been fully implemented. Among other things: the salary of employee that is not

accordance with the regional minimum wages and has gharar element in the production process, that is the

use of pirated software.

1 INTRODUCTION

Industry is one of human economic activities that

has a strategic position and potential as a source of

income of the community in an effort to produce

daily needs (Mariani, 2013). Small industries and

households have three important reasons underlying

their existence in Indonesia. First, it is because the

performance of small industries and households

tends to be better at producing productive labor.

Second, some of the dynamics, small industries and

households often achieve increased productivity

through investment and technological change. Third,

because it is often believed that small household

industries have advantages in terms of flexibility

rather than large businesses (Joesyiana, 2017).

Home industry or business at home is a place to

live that is also a place of business, whether in the

form of business services, offices, to trade and all

types of economic activities that are centered at

home.

Business ethics in Islam are a number of ethical

business behaviors which are wrapped in sharia

values that promote halal and haram. So ethical

behavior is behavior that follows God's commands

and kee away from the prohibition. In Islam, this

business ethic has been widely discussed in various

literatures and its main source is Al-Quran and

Hadits. Business people are expected to act ethically

in various activities. Trust, fairness and honesty are

the main elements in achieving a successful business

in the future (Amalia, 2013).

According to Islamic business ethics, every

business person in trading should not merely aimed

for maximaizing profit, but the most important thing

is to seek and achieve blessings for the sustenance

provided by Allah SWT (Anindya, 2017).

Reviewing the total number of micro and small

industries by province in 2013-2015, East Java

province increased it reached to 771,185 micro

business units. Islamic business ethics has become

one of the issues that has great potential to advance

and improve the welfare of a home industry. In this

160

Akbar, F., Latif, A. and Roﬁqo, A.

Strategic Analysis of Home Industry Development based on Islamic Business Ethics Perspective.

DOI: 10.5220/0010119500002898

In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance (7th AICIF 2019) - Revival of Islamic Social Finance to Strengthen Economic Development Towards

a Global Industrial Revolution, pages 160-164

ISBN: 978-989-758-473-2

case business people have the authority and power to

regulate and plan all business activities of the

business premises. All kinds of Islamic business

ethics that exist, will have a positive impact on the

continuity of business. The strategy of business

people in improving their business must be on target

in accordance with the rules of religion, so that

employees, the surrounding community can enjoy

the positive impact of implementing Islamic

business ethics. Judging from the existing data in

East Java province, has been shown to a large

impact on business activities that are healthy and in

accordance with Islamic law.

From the above explanation about home industry

and Islamic business ethics, the author is interested

in discussing how is the strategy of home industry

strategy based on Islamic business ethics. Besides

the cost or business capital that is not too much, the

home industry that produces various results of

human needs is in demand by the people of

Indonesia. Which can be seen from the data of the

statistic center, that the development of the number

of home industries in Indonesia has increased.

Moreover, the Indonesian people who are

predominantly Muslim, still do not understand the

concept of Islamic business ethics. Then research

needs to be held to discuss this. With the main goal,

can provide insight into Islamic business ethics and

apply it in business.

2 LITERATURE REVIEW

Home Industry is a productive business owned by

individuals or individual business entities that meet

the criteria of micro-enterprises. According to

Husein, home industry is a home industry that has a

workforce between 4 which coming from a family

environment or surrounding neighbors. According to

Haymans, Home Industry is a small-scale,

traditional and informal people's economic activity,

in the sense that it has not been registered, has not

been registered, and has no legal entity (Astutik &

Dewi, 2013).

According to Muliawan a small household

industry is a business unit or company on a small

scale engaged in certain industrial fields. Usually

this company only uses one or two houses as a

center for administrative and marketing production

simultaneously. When viewed in terms of business

capital and the amount of labor is certainly less than

large companies in general. This home industry

business can involve all family members in the

management, production and marketing. According

to M. Tohar the characteristics of industrial home

include (Warsitaningsih, 2003): a. Production

equipment is generally simple. b. The business is

still traditional. c. The business structure is

traditional. d. Serving the local market. e. Still need

entrepreneurial guidance. f. Still need procurement

and marketing assistance.

The size of the business in question can be

determined by looking at the size of the business

capital used. Small company if: a. The trading /

service business carried out has a capital of no more

than Rp. 40 million (forty million rupiahs). b.

Production / industrial businesses or construction

services that have a capital of no more than Rp. 100

million (one hundred million rupiah).

Industry can also be classified based on the

number of workers, the amount of investment and

the type of commodity produced. Based on the

number of workers, the industry can be categorized

into 4 groups, namely (Haslinda, 2018): a.The

number of workers is 1-4 people for the home

industry, b.The number of workers is 5-19 people

for small industries, c. The number of workers is 20-

99 people for the middle industry, d. The number of

workers is more or equal to 100 people for large

industries.

When viewed from some of the above

characteristics, it can be concluded that the home

industry is very different from the company. Which

is where the company has very many employees.

But if the home industry, the maximum number of

workers is only 100 people. The existence of this

home industry has a very positive impact on the

workforce of the surrounding community by helping

the economy of the surrounding community. Even

better if the home industry is sheltered by the local

government, which can reduce the number of

unemployed. And if we review the laws of the

Republic of Indonesia, it must belong to Indonesian

citizens themselves. In essence the characteristics of

a home industry are limited by the number of

workers, business assets and income. If it exceeds

the predetermined limit, it is called a bear company,

not a home industry anymore.

Islamic Business Ethics. Etymologically, ethics

comes from the Greek “ethos language” which

means attitude, way of thinking, habits, customs,

morals, feelings and character of morality. The term

ethics has been used by Aristotle, the Greek

philosopher, to show moral philosophy. So ethics

means principles, norms, and standards of behavior

that govern individuals and groups that distinguish

what is right and what is wrong. Business ethics

(ethic business) seeks to prohibit business behavior,

Strategic Analysis of Home Industry Development based on Islamic Business Ethics Perspective

161

company managers and workers that should not be

done (Nawatmi, 2010). Where as in Islam business

can be understood as a series of business activities in

various forms that are not limited in the amount

(quantity) of property ownership (goods / services)

including profits, but are limited in the way of

acquiring and using assets (there are halal and haram

rules) according to (Norvadewi, 2015).

The Qur'an and Hadith as a source of all values

and guidelines in every life, including in business.

These two references can be the controller of actions

that are not commendable in business practices, by

holding fast to these two sources, everyone will be

encouraged to do good deeds (Anindya, 2017).

Business ethics in Islam are a number of ethical

business behaviors (akhlaq al Islamiyah) which are

wrapped in sharia values that promote halal and

haram. In Islam this business ethic has been widely

discussed in various literature and its main source is

the Al-Qur`an and Hadits. Business people are

expected to act ethically in various activities. Trust,

fairness and honesty are the main elements in

achieving a successful business in the future.

Ethics and integrity are pure desires in helping

others. The occurrence of unhealthy business ethics

in the business world does not seem to show a

tendency but on the contrary, increasingly days are

increasing. Extreme honesty, the ability to analyze

the limits of one's competition, the ability to admit

mistakes and learn from failure. This competition

must be heated up lately (Jusmani, et. al, 2008).

Accoarding to Umer Chapra explains that

Islamic economic development is built on ethical

and moral values and refers to the goal of Shari'a

(maqashid al-shari'ah), which is to maintain faith,

life, reason, descent and wealth. This concept

explains that the economic system should be built

starting from a belief and ending with wealth. In

turn, there will not be economic inequality or

economic behavior that conflicts with the principles

of Shari'a (Baidowi, 2011).

The basic principles of Islamic ethics and

practice in business are five principles that underlie

Islamic ethics, namely (Nawatmi, 2010); Tauhid,

Balance, Free Will, Responsibility, Benevolence.

From the explanation above, it can be concluded

that the concept of Islamic business ethics is a very

strong concept and covers all aspects of business

activities. Economic activities, especially in

business, must be built on ethical and moral values

and refer to the objectives of the Shari'a (maqashid

al-shari'ah), which is to maintain faith, life, reason,

descent and wealth. This concept explains that the

economic system should be built starting from a

belief and ending with wealth. This wealth is also

used not only for worldly pleasures, but also for

savings in the hereafter. By way of allocating a

portion of funds to Muslims who are more in need.

By giving sustenance to those who are more in need,

the sustenance we have will never run out. Because

sustenance will be given by Allah SWT if humans

carry out what they are commanded and stay away

from His prohibitions and want to help fellow

Muslims.

3 METHODOLOGY

This study uses a qualitative method. The definition

of qualitative research is a type of research that

seeks to dig deep information, and is open to all

responses and not just yes or no answers. This

research tries to ask people to express their thoughts

about a topic without giving them much direction or

guidance on what to say.

This method was chosen because the author

wanted to discuss and analyze the home industry

model based on Islamic business ethics. In order to

obtain valid and reliable data, the researcher also

examined some literatures relating to the research

title. The location of the study was conducted at

Kaos Hasby Ponorogo East Java, was chosen

because the home industry was a home industry

whose initial capital did not use usury or loans from

banks.

Another factor is that home industry

management is based on the concept of Islamic

sharia. The researcher wants to analyze the home

industry model based on the perspective of Islamic

business ethics applied by “Kaos Hasby”.

The technique of data collection is done by

triangulation. Triangulation is defined as a technique

that combines several different data collection

techniques from the same source (Sugiyono, 2010).

This technique was chosen so that researchers

get valid and credible data, and so that researchers

can understand all the problems in depth. The data

used in this study are primary data and secondary

data. Primary data is taken from the results of

observations, interviews (interviews), and

documentation and archives of Kaos Hasby.

Secondary data is taken from several literatures and

journals that are related to this paper. This study

uses inductive analysis techniques in processing the

data obtained. Inductive analysis is testing the

problem in the data that has been collected, the

inductive thinking process begins by drawing

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conclusions from the collected data, which is then

taken in general conclusions.

4 ANALYSIS AND RESULT

The provisions of Islamic law regarding capital,

some provisions of Islamic law regarding capital are

stated A. Muhsin Sulaiman, as quoted by Rustam

Effendi, are as follows: a. Islam prohibits stockpiling

of capital, b. Capital may not be borrowed and lent

by usury, c. Capital must be in the same way as

obtaining ownership rights (in a lawful way, for

example, see), d. Capital that reaches Nisab, zakat

must be issued (85 grams of gold, pen), e. Capital

must not be used to produce wastefully, f. Payment

of salaries of workers / workers must be in

accordance with the provisions of salary in Islam.

However, the Kaos Hasby home industry has not

run as a whole, among others, there are employee

salaries below the Ponorogo UMR, which amounts

to Rp 1,763,267.65. Whereas there are employees of

the Hasby T-shirt as the operator, which is only Rp.

1,500,000.00. So this is not in accordance with the

concept of Islamic business ethics. Then the shirt

Hasby had borrowed money from a bank which had

ribawi elements from 2007 to 2016. The last

designer Kaos Hasby still operates software on paid

non-original pirated computers. This is not in

accordance with the concept of Islamic business

ethics that contains elements of gharar or not clear

from where the software is obtained, not the original

(Hasby 2019).

The concept of freedom in Islam is more directed

at cooperation, not competition, let alone to kill each

other's businesses. Even if there is competition in the

business, it means competition in doing good or

fastabiq al-khairat (competing in virtue) (Hasby,

2019). Kaos Hasby home industry has implemented

this concept. "In the Islamic business concept, there

is no such thing as competitors or competitors. But

work partners can be invited to work together in

business. Competing in goodness in a good way

too.” (Hasby, 2019).

In business transactions in Kaos Hasby has

applied the concept of Islamic business ethics. By

setting aside company profits to zakat which are

then allocated to the poor, orphans and laziswaf

institutions which are carried out once a month

(Hasby, 2019). The business responsibilities carried

out by the home industry of Hasby are in line with

Islamic business ethics, including in the distribution

of production. Which must reach the customer's

hands.

5 CONCLUSION

Home industry or home industry is a productive type

of business. Which is owned by individuals and or

individual business entities that meet the criteria for

small and medium micro enterprises (UMKM). Of

course in the types or types of home industries are

very diverse. Starting from clothing, food and board

production. Some are engaged in convection, some

are in the food sector and some are in the building

field. When viewed from an Islamic perspective, the

home industry relies heavily on human reason in all

its sub-sectors, which is a fundamental thing that

distinguishes between humans and other creatures.

Allah SWT has given reason to humans so that they

think, it is often referred to in the Holy Qur'an, so

that humans always remember that the mind given

by Allah SWT must be used, to improve and

maintain the welfare of mankind in life in the world

and the day after.

In Islamic business ethics, it requires every

Muslim, especially those who have dependents to

work. Working is one of the main reasons that

allows humans to have wealth. To enable humans to

try to make a living, Allah SWT enlarged the earth

and provided various facilities that could be used to

seek fortune. Islam places business as the best way

to get wealth. Therefore, all business activities must

be carried out in the best ways by not committing

fraud, usury, fraud, and other acts of injustice.

Awareness of the importance of ethics in business is

an awareness of oneself in seeing himself when

dealing with good and bad things, which are lawful

and haram.

From the explanation and analysis of the above

discussion regarding the development of home

industry in Kaos Hasby Ponorogo, it can be

concluded that: a. The home industry of Kaos

Hasby, that its development has increased and

decreased. Where the initial phase starts from zero

and continues to crawl until it is known by the

community. And in the decline phase occurred in

2007-2016, which borrowed funds from banks that

had a religious element. So God is destined not to

bring this business to life. But since mid 2017 until

now, this home industry has experienced a

significant development. Plus the factor of system

renewal and the application of Islamic concepts in

business. b. Then regarding the presentation of the

Kaos Hasby business development model based on

the perspective of Islamic business ethics in a

number of factors including: business transactions,

business cooperation, business capital,

responsibility. Which is not yet fully realized, only a

Strategic Analysis of Home Industry Development based on Islamic Business Ethics Perspective

163

few have been implemented. However, this can be

taught because the pesantren cultural system that is

undertaken by the Kaos Hasby is still a new system.

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