8 - The Quasi-Integration of Firms in an Islamic Community: The Case of MÜSİAD

Summary

Moving from politics to economics, this chapter investigates the role of Islam in the success of an Islamic-based business association operating in Turkey. MÜSİAD, the Independent Industrialists’ and Businessmen’s Association, was founded to bring together small- and medium-sized enterprises based in Anatolia who, because of their size and their lack of political connections, struggled to succeed in Turkey’s volatile, statist economy. Since its foundation, MÜSİAD seems to have helped these small businesses grow into “Anatolian Tigers,” apparently outpacing non-member firms. While existing theories of identity-based trade would suppose that MÜSİAD’s success rests in its ability to support a reputation mechanism among member firms or, alternatively, because of its new-found political connections to the AKP or privileged access to Islamic micro-credit, I find little empirical support for these hypotheses. Instead, using data at the firm level, I show that MÜSİAD firms succeed by relying on long-term “quasi-integrative” relationships among members, relationships which mimic the benefits of vertical integration enjoyed by larger firms. More specifically, this quasi-integration serves to protect MÜSİAD members during periods of economic volatility, although it proves to less efficient under more stable conditions, including during the period of AKP rule.