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There are many verses in the Quran that relate to this point;

“For, every community faces a direction of its own, of which He is the focal point. Vie, therefore, with one another in doing good works. Wherever you may be, Allah will gather you all unto Himself: for, verily, Allah has the power to will anything.”
(The Quran, 2:148)

“So for this let the competitors compete.”
(The Quran, 83:26)

“And vie with one another to attain to your Sustainer’s forgiveness and to a paradise as vast as the heavens and the earth, which has been readied for the God-conscious.”
(The Quran, 3:133)

As of hadiths, the following quatations are some that point to the same meaning;

“If people knew what virtue lies in the azan and [praying] in the first row, and they could not [obtain these opportunities] except by drawing lots, they would definitely do so. If they knew what virtue lies in going early to prayer, they would have vied with one another [to do so]. If they knew what virtue lies in the evening and morning prayers, they would definitely go to them, even if crawling on their knees.”
[Narrated by Al-Nasa’ii]

“There should be no envy but only in case of two persons: one having been endowed with wealth and power to spend it in the cause of Truth, and (the other) who has been endowed with wisdom and he decides cases with the help of it and teaches it (to others).”
[Narrated by Muslim]

Both hadiths enjoin spirit of competition in rituals and charity.

More interestingly, the later hadith teaches us that the right way to “envy” someone’s achievement is to drive ourselves to do better than the person is, instead of destroying his accomplishment.

This is the essence of healthy or ethical competition that is known today in business.

The spirit was alive among the companions during the life of the Prophet (SallAllahu Alaihi Wa Sallam) that each of them was trying to be better than the other in ibadah and charity.

One most prominent and popular example is reported in a hadith on Umar (RadiyAllahu Anhu).

It was reported, when the Prophet (SallAllahu Alaihi Wa Sallam) made a public appeal for donation to support a military mission, Umar (RA) said,
“At that time I had some money. I said, ‘Today I shall surpass Abu Bakr, if I am to ever surpass him on any day.’

I therefore brought half of my wealth. The Messenger of Allah s.a.w asked, ‘What have you left for your family?’

I replied, ‘The same amount.’

Abu Bakr (RA) brought all that he had with him. The Messenger of Allah (SallAllahu Alaihi Wa Sallam) asked him,
‘What have you left for your family?’

He replied,

‘I have left Allah and His Messenger for them.’

Thereupon I said, ‘I shall never surpass him in anything.’” [Narrated by Al-Tirmidhi and Abu Daud]

Another hadith reports a competitive spirit between Abu Bakr and Umar, RadiyAllahu Anhuma.

Both have heard the Messenger of Allah s.a.w praising the way Ibn Mas`ud r.a. recited the Quran, saying: “A person who wants to recite the Quran as tenderly as it was revealed should recite it in the same way as Ibn Um ‘Abd does.”

Umar r.a hurriedly went to Ibn Mas`ud’s house at night to convey these glad tidings to him only to be told that Abu Bakr r.a. has already preceded him.

Umar r.a. then said, “If he really did, then he usually does precede us in everything that is good. Whenever we compete against each other in goodness, Abu Bakr always wins!”