Exploring the Hidden Struggle for Shari’a Compliance: Shari’a Advisors' Moral and Ethical Ideology, and its Effect on the Management Tactics for Fatwa Repositioning in their Favor, with the Mediatory Role of Demographic, External and Personal Factors

Shari’a scholars and managers of IFIs have divergent objectives, which creates incongruence of objectives at the strategic level. This study aims to explore the tension and latent struggle for Shari’a compliance, which has been termed as ‘Fatwa Repositioning’ by Ullah et. al. (2018). Fatwa Repositioning exhibits how managers and Shari’a scholars struggle to position the Shari’a compliance of their institutions to best serve their respective objectives. Ullah et. al. identified different codes based on the concepts derived from their exploratory work, based on the same conceptualization, we developed a theoretical framework explaining how the ideology of sharia advisors affect management actions towards fatwa repositioning. We hypothesized that different ideologies interact with different Demographic, External, and Personal Factors to form sharia compliance objectives of Shari’a advisors. These objectives would influence the ways management tends to reposition compliance in their favor. These Moral and ethical ideologies included 1. Social Welfare, 2. Secured Investment, 3. Fairness &amp; Justice, 4. Philanthropy, 5. Profiteering, 6. Unity Principle, and 7. Conventional Reciprocity. Management tactics for Fatwa Repositioning included 1. Avoidance, 2. Coercion 3. Compromising, 4. Confrontation, and 5. Controlling, 6. Sharia board backing. Conditions mediating this relationship included demographic (Educational and Experience Disparity), personal (Eternal Reward, Self Interest, and Shariah Reputation Risk), and external (Depositor Expectation, External Shariah Scholar Pressure, and Regulatory Controls). Empirical validity was established by conducting a survey using a close-ended questionnaire. Data were collected from 100 respondents working in the Shari’a department and analyzed using confirmatory factor analysis and structured equation modeling. The results suggested that the ideology of conventional reciprocity leads to coercion as well as controlling strategy through hiring lenient advisors, this is mediated by shariah reputation risk. Coercion is also mediated by regulatory controls. Similarly, fairness &amp; justice ideology also lead to coercion and controlling, mediated by eternal rewards. Whereas it leads to confrontation it mediated by depositors’ expectations. Similarly, philanthropy ideology also led to coercion and controlling mediated by depositor expectation and shariah reputation risk respectively. Philanthropy mediated by depositor expectation also leads towards confrontation. The ideology of ethical investment leads to a compromising strategy; this relationship is strengthening in case of educational disparity. Shari’a scholars’ that follow the ideology of profiteering (which is similar to the management philosophy) could also lead to confrontation and controlling if they are high expectations by the depositors about their deposit compliance with the Shari'ah. The concept of secured investment means the proper implementation of risk-sharing instruments, which can also lead to confrontation, coercion, shariah board backing, as well as controlling in case of higher depositors’ expectations. Coercion can also happen in case of a higher disparity of experience in Shari’a scholars. scholars who follow the principle of social welfare can lead to confrontation, coercion, and sometimes compromising tactics if they have higher educational disparity. They can also be controlled if shariah reputation risk is higher. The philosophy of unity principle suggested that everything in the world is God’s property and it should never be used in the exploitation of the people but rather, should be used for noble and good causes. Scholars following this ideology could also be subject to coercion, confrontation, as well as controlling, in case of higher depositor expectation, or if they are guided by either their self-interest or by the concept of eternal rewards making them mindful of what they declare Haram or Halal. The unity principle can also lead to avoidance tactics by the management in case of eternal reward, and self-interest. The unity principle can lead to shariah board backing in case of depositor expectation and eternal rewards.