Zakat, CSR, and Competitive Edge: Rethinking Company Performance through Islamic Social Finance

Corporate zakat represents a unique intersection of religious obligation, corporate social responsibility (CSR), and business performance. This paper explores the dual role of corporate zakat in enhancing both financial and non-financial outcomes for companies. Drawing on previous studies conducted across Islamic financial institutions and listed companies in countries such as Malaysia, Indonesia, Saudi Arabia, and beyond, the findings suggest that zakat payment has a positive impact on profitability, operational efficiency, and long-term financial sustainability. Beyond financial performance, zakat contributes to non-financial value creation by fostering corporate reputation, employee commitment, customer trust, and community well-being. It also aligns with the broader objectives of Shariah and the Sustainable Development Goals, particularly in alleviating poverty and reducing socio-economic inequalities. However, the literature reveals that most prior research has focused on financial institutions and contexts where zakat is mandatory, leaving a gap in understanding its implications for private and voluntary corporate settings. This paper concludes that corporate zakat should be seen not only as a religious duty but also as a strategic tool for sustainable development and competitive advantage, warranting further investigation into its broader applications and impact.