Business and Management Environment in Saudi Arabia: Challenges and Opportunities for Multinational Corporations

Citation

Weir, D. (2009), "Business and Management Environment in Saudi Arabia: Challenges and Opportunities for Multinational Corporations", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 2 No. 3, pp. 268-270. https://doi.org/10.1108/imefm.2009.2.3.268.1

This book will become required reading for anyone wishing to understand the complexities of undertaking business in the kingdom of Saudi Arabia. It is a wide‐ranging account of the history, socio‐political environment, current economic situation and the values and cultures of management, thereby constituting an authoritative and nonetheless critical analysis.

It looks back to the evolution of the peculiar and specific conditions that have framed the Saudi economy, and subtly and conscientiously relates actual behaviours to the deeper infrastructures of belief and religion that mould the Saudi systems. Abbas Ali has, in his previous writings, proved himself to be a leading scholar of the Islamic traditions of business and economics and their evolving impact in the global economic system, and has brought his considerable grasp of economics and of managerial values and beliefs into a close focus on a particular nation‐state that stands at the pivot of the global political scene.

Politicians and outside critics of the Arab business and managerial mentality should study this book very carefully, for it does not tend to reinforce existing prejudices, but rather illuminates the special complexities of the overall situation.

The first chapter gets straight into the heart of the matter in sketching the socio‐political environment in its historical context. Ali deals with the contrast between the Islam of the desert and that of the cities that forms the first antithesis in the region. The pre‐oil and post‐oil eras are not simply treated as absolute ideal types of economic action or situated in the arid discourse of development stages, but are related through an exposition of the historical evolution of Arab thought and knowledge and a depiction of the six Islamic schools, of Jabria, Tafwiz, Ikhtiar, Mutazilas, Averroes, and the Ikhwan us Safa. The distinctive features of the Wahhabi ideology, with its emphasis on purity of belief and action and of obedience to established rulers, is ably described and contextualised.

But Ali is no uncritical recorder of the drive to economic suzerainty of the Saudi approach in the modern world and the desires of its leadership to be accepted universally as the leader of the Muslim world and as the valued and trusted ally of the West. He criticizes the political decisions that led to the support for the Western expectation that a Middle East without Saddam Hussein would inevitably be a safer place and points to the growing gap between the regime and its publics on this matter.

Ali recognizes – as do other authorities on business and management in the Middle East – that business here is based on relationships of trust and mediation and that the establishment of a network of trust and confidence is the essential foundation of effective personal performance and organisational survival.

The second chapter describes the current state and prospects for the Saudi economy, the role of government in this distinctive form of private enterprise and describes the various five‐year planning cycles and relates the changing economy to the views of Saudi managers. These are reported as generally positive, but it is necessary to be cautious in relying too much on these data and to point out that these data were collected before the present economic downturn.

Ali enumerates the possible risks to this foresight of a positive economic scenario and identifies a number of risks, in the rise of extremism, possibility of spectacular terrorist acts, a sudden slump in oil prices, decline in US support, Wahhabi religious authority withholding support to free marker developments, rivalries among members of the ruling family, political instability in the regions, and even a war with neighbouring countries where there is more than one potential flashpoint.

The third chapter relates the Saudi economy to its regional markets and moves into a consideration of the relatively variable performance of the countries in the MENA region in terms of the United Nations Human Resource Development Index, with the four GCC countries of Kuwait, Bahrain, UAE and Qatar rated highly, while Yemen, Mauritania and Djibouti are in the bottom group. Ali concludes that in a generally promising economic picture it is political and organisational factors that may act as restraining forces.

In the next chapters, the author turns his focus on to the role of the manager. Ali notes Alhashemi's analysis that management in the region suffers from five fundamental problems, of weak management infrastructures, experimentalism, impressionism, manpower development imbalances and a poor research base, as well as Abdul Rahman's assertion that “modern management does not exist in the region.”

Ali's own empirical research led him to categorise the activities of management in the three groups of organisational‐rational, psychological and social. He notes the importance of activities like the Diwaniha and the central necessity of social respect in positioning the managerial role.

This leads into the next chapter that leans on original research into managerial values undertaken by Ali et al. in 1982 and 1986. While these results are interesting, it is evident that data from these time periods are of course not necessarily conclusive evidence of contemporary trends. Nonetheless, Ali concludes that there is a gradual change in values taking place among Saudi managers. They are still family‐oriented and socio‐centric but they need, says Ali, to be accepted as competent and motivated, involved in participative modes of consultation and involvement and not dismissed with dated stereotypes of emotionality and irresponsibility.

This theme is developed in the next chapter that traces the emergence of an Islamic work ethic, and Ali finds that “managers in the kingdom demonstrate a strong commitment to hard work and to the value of working in one's life.”

Ali moves on to position the nature of group dynamics and work relations in the context of society, the firm and the tribal and family ties, illustrating these inter‐linkages with an account of the evolution of the Ibn Saud family from its origins in the Najad region to the extension of the Saudi familial structures into those of the emerging kingdom. These groupings are not easily defined in terms of the classical Western division into “formal” and “informal” because they segue from one to the other, offering members advantages of networks, access and information and, in particular, providing the characteristic regional and religiously‐based conditions for the emergence of a “Just Ruler” in Ibn Saud.

Ali also deals with some aspects of communication and negotiation in the kingdom, again relating these both to pervasive cultural patterns and also to current business needs. In particular the role of wasiet (intermediary) structures and the requirements of face‐to‐face meetings in establishing trust are emphasised.

In Chapter nine, Ali deals with the human resource management issues and in particular with the implications of the large number of expatriate workers and managers in the kingdom and the political attempts to cope with these and, in particular, through the policies of Saudization. Ali concludes that these are unlikely to change the current situation much in the short term.

In discussing decision‐making styles, attitudes towards risk, organisational change and development and in organisational form and design Ali follows the consistent approach of relating managerial behaviours to underlying aspects of deep culture and structure, so his discussion of language traps, interpersonal aggression and political and cultural blunders is instructive and sophisticated.

One of the great strengths of this book is that it effortlessly melds detailed knowledge of specific families, business situations and interpersonal behaviours to the overall economic context and to the social and cultural structures in which these are located.

There are some points where one would have wished for more development of tantalising hints about, for example, the increasing socio‐political pressures of gender and age and the positioning of other global players, especially China and India definitely needs more attention in a future edition. But overall this book is a must‐read for students of the Saudi economic phenomenon, whether they are business people, managers or scholars and it will enable them to frame better‐informed judgements about the future.