Linking Islamic business ethics to life satisfaction and financial performance: the intervening effects of employee relations climate and competitive strategy in the financial sector

Purpose Achieving success as a financial institution under Islamic business ethics (IBE) is becoming a substantial challenge for organizations in developing countries. This study aims to examine the relationship between IBE and employee relations climate (ERC), life satisfaction (LSN), competitive strategy (CSY) and financial performance (FPE) in Islamic financial institutions in Egypt. Design/methodology/approach The ethical climate theory underpins the framework of this study. This study’s mode is deductive, and it uses cross-sectional data collected from the middle and top managers of Egyptian financial institutions using an online survey questionnaire. This study uses a sample size of 343. Findings The path analysis reveals a positive association between IBE and ERC, FPE, LSN and CSY. ERC is found to be a positive predictor of FPE and LSN. CSY is positively associated with FPE but negatively with LSN. Finally, ERC mediates the association between IBE and FPE, and CSY mediates the link between IBE and LSN. Practical implications This study provides strategies for managers to promote an ethical organizational culture based on ethics such as trust, honesty and justice to bring success to organizations and well-being among employees. Ultimately, this study’s findings contribute to the literature by providing empirical evidence from financial institutions in a developing context. Originality/value This study bridges the gap between Western-centric ethical models and those of Arab developing countries, thereby contributing to its contextual relevance. It offers an integrated framework that connects IBE, ERC, CSY, LSN and FPE, specifically in the financial sector in a developing context.