Doing business in Saudi Arabia

The Kingdom of Saudi Arabia is the largest market in the Arabian Gulf region and, despite current political and economic uncertainties, offers investors and exporters many opportunities in a wide variety of business sectors. Key factors driving economic policy include the desire to reduce the dependence on oil, and the need to provide jobs, housing, and services to citizens in a time of rapid population growth. The foreign investment law of 2000 significantly changed the rules for foreign investors, permitting 100% ownership of projects. There is a streamlined foreign investment application process with various investment incentives. Important policies are privatization, economic diversification (such as the development of a tourism sector), and the education and training of Saudi workers. Although lifestyle in the kingdom is ultramodern and high‐tech, Saudi Arabia is an extremely conservative country and many of its citizens desire to preserve their religious values and ancient traditions. The Saudi culture is influenced by two dimensions: Islam and the Bedouin tradition. Foreign executives doing business in Saudi Arabia must be prepared to conduct thorough preliminary research, visit the kingdom regularly, show genuine concern for Saudi development goals and culture, be patient in business negotiations, and adapt carefully to the Saudi environment. © 2004 Wiley Periodicals, Inc.     

Managing MNC-Government Negotiations in Saudi Arabia: The Key Role of Elites

This article explores the relationships between multinational corporations (MNCs) and a host country, in this case Saudi Arabia (the Kingdom). The interests of Saudi businesses and the political elite, along with the evolution of their relationship are surveyed. Furthermore, the validity of traditional and two-tier models of bargaining between MNCs and developing countries are assessed in the context of the Kingdom. It is argued that while both models may be useful, the two fail to capture the nature of MNCs-Saudi Arabia bargaining process. These two models are revised and enriched to adequately reflect the Kingdom's specific advantage, the nature of its national firms, and the unique relations it has with MNCs and their home countries. The study concludes that under current global political and economic conditions, the elite and MNCs interests appear to converge around business objectives.     

Foreign direct investment: A strategic move toward sustainable free enterprise and economic development in Saudi Arabia

Foreign direct investment (FDI) has been viewed in many circles as one of the key drivers for economic development. Irrespective of their ideological differences, most countries around the world have been competing to attract FDI. China, for example, is a country formally characterized by communist ideology. It has been highly proactive in formulating policies amenable to FDI so much so that in 2003, China overtook the United States as the biggest recipient of FDI, having attracted U.S. $53 billion from Organisation for Economic Co‐operation and Development (OECD) countries and elsewhere. In this article, an attempt is made to critically examine aspects of FDI, especially with reference to economic development in Saudi Arabia. The research study in this article reports new research findings based on a survey of Saudi managers/enterprises that highlight the current status of FDI in the Kingdom of Saudi Arabia. In particular, the study finds that while Saudi managers generally welcome FDI into the country, at the same time, they do retain ambivalent attitudes toward its perceived benefits.     

The development of consumer protection in Saudi Arabia

The development of consumer protection in Saudi Arabia is of interest for a number of reasons. First, Saudi Arabia presents a unique combination of size, stage of development of the economy and wealth, coupled with strictness of Islamic observance. Second, consumer protection in the Saudi context has received very little attention from researchers. Despite the richness of Islamic teachings on the conduct of business and trade, very little has been written on consumer protection in Islamic societies other than discussions of financial markets and consumer credit and monopoly. This article briefly explores the background to the emergence of consumer protection in Saudi Arabia. Consumer credit and financial markets are excluded from the discussion. Islamic (Shari’ah) law is analysed as a basis for the regulation of consumer affairs; this system of law is then compared in its major outcomes for consumers with legal systems in advanced Western economies. The development of secular commercial law during recent times in Saudi Arabia is also considered as a parallel development to those in Shari’ah. Both strands of development are then set in the context of Saudi Arabia's 5‐year development plans and the changing position of consumer policy issues is tracked through successive plans. The institutional location of consumer policy within the Saudi government system is discussed before finally considering the changing nature of the Saudi consumer and the possible future for consumer protection in the country.     

The merchant prince

Executive Summary Youssef Mohammed has returned to the Kingdom of Saudi Arabia after completing a Ph.D. in Business. He is expected to take a leadership position within a family business that is experiencing a multitude of operational and strategic problems. For Youssef, the problem is whether to accept a position where he directs an organizational‐change effort or as a detailed, hands‐on manager as family tradition commands. In addition, Youssef wonders if the Western‐management principles he has learned would be effective in the Kingdom. The case provides background information on doing business in Saudi Arabia, highlighting differences between U.S. and Middle‐Eastern business practices. © 2000 John Wiley & Sons, Inc.     

Exploring the mismatch between skills and jobs for women in Saudi Arabia in technical and vocational areas: the views of Saudi Arabian private sector business managers

Saudi Arabia’s rapid development has highlighted the shortage of national technical manpower and the subsequent need to recruit non‐Saudi technical workers, on the one hand, and the difficulty of replacing these workers with qualified Saudis, on the other. Therefore successive Development Plans have tried to raise the quality and quantity of technical and vocational education for both men and women. In 1995/96 only 5 per cent of Technical and Vocational Education (TEVT) enrolled students were female. This compares with an average of 29 per cent in other Islamic countries and 45 per cent in Japan (UNESCO, 1997, 1999). Part of this may be due to the preferences of female students in education, part due to the structure of TEVT in Saudi Arabia, part due to the availability of technical and vocational jobs available for women after completing their training and part due to the natural place of women in Saudi society. The Seventh Development Plan (2000–2004) assumes that the private sector will play a very significant role in employing a Saudi labour force including both men and women. As part of a comprehensive study concerning the factors affecting women’s employment in the Saudi private sector private sector business managers in four large cities were surveyed to see what factors they felt were important. The main factors affecting employment of women in technical and vocational education were seen by the managers as those relating to the structure of TEVT education in Saudi Arabia rather than preferences of women or pressures from society.     

China＇s Annual Trade Surplus to Go Down Sharply——More from the Ministry of Commerce

On June 12, Yao Jian, spokesman of the Ministry of Commerce released more details on the trade and investment in the first five months this year.     

U.S. Corporate Assessment of Joint Ventures in a Non-Western Country

This research investigates the U.S. firms' assessment of their joint ventures in Saudi Arabia. Ninety-three firms participated in this study. The results indicate that U.S. firms in Sauydi Arabia have set a multiple rather than a single objective (e.g., profit, return on investment, sales growth, etc.). The majority of the respondents (55%) rate JV profitability as below profitability of U.S. parent firms, yet they rate it as the most important for establishing JVs in Saudi Arabia. The results also show that the majority of the participants approached Saudi enterprises to establish JVs. In addition, U.S. firms seem Saudi partners in order to deal effectively and/or meet political/governments' demands.     

Internet banking acceptance model: Cross-market examination

This article proposes a revised technology acceptance model to measure consumers' acceptance of Internet banking, the Internet banking acceptance model (IBAM). Data was collected from 618 university students in the United Kingdom and Saudi Arabia. The results suggest the importance of attitude, such that attitude and behavioral intentions emerge as a single factor, denoted as “attitudinal intentions” (AI). Structural equation modeling confirms the fit of the model, in which perceived usefulness and trust fully mediate the impact of subjective norms and perceived manageability on AI. The invariance analysis demonstrates the psychometric equivalence of the IBAM measurements between the two country groups. At the structural level, the influence of trust and system usefulness on AI varies between the two countries, emphasizing the potential role of cultures in IS adoption. The IBAM is robust and parsimonious, explaining over 80% of AI.     

阿拉伯海湾国家经济一体化及面临的挑战

阿拉伯海湾地区丰富的石油资源和年进口达1000亿美元以上的市场令世界瞩目。海湾6国在20世纪80年代初建立地区经济组织——阿拉伯海湾国家合作委员会以来,为促进各国经济贸易共同发展做出了可喜成绩。进入21世纪,海湾六国又在经济一体化道路上迈出新的步伐,成为世人关注的焦点之一。     

A cross-national analysis of perceptions of corporate governance principles

Increased trade between developed and emerging economies has led to a gradual convergence of policies related to corporate governance as multinational firms attempt to standardize best practices worldwide. Due in part to this movement organizations such as the OECD and World Bank have contributed to the streamlining of acceptable protocol for publicly traded firms around the globe. In 1999 the OECD Principles of Corporate Governance were endorsed by OECD ministers in an attempt to influence policymakers by setting global governance standards. Yet the extent to which perceptions of these principles vary between OECD members and non-members is unclear. Obtaining a greater understanding of how individuals from diverse nations perceive these principles is important to managers as they maneuver through the complex world of international business. In this study we employ relational demography theory to develop and test a survey instrument in the Kingdom of Saudi Arabia and in the United States to assess perceptions of OECD principles. Results from a survey of 284 managers (Saudi Arabia n = 168, USA n = 116) suggest that regardless of culture perceptions of shareholder rights are positively related to beliefs about the integrity of the national legal and regulatory framework. Also, differences between the Saudi and U.S. samples on perceptions of shareholder participation, disclosure and the role of the audit function are identified. Managerial implications and future research directions are also discussed.     

Us consumer product marketing in Saudi Arabia: Comparative perceptions

The period between 1970 and 1990 has seen a steady decline of the market share of US products in Saudi Arabia. This article deals with the differing perceptions of US exporters and Saudi importers regarding factors that might have contributed to this decline. These factors include the marketing environment, the product, the price, the distribution, US business practices, advertising, trade policies and the market situation in Saudi Arabia, and the role played by the US government. An analysis of these factors has led to a series of recommendations to respective governments and businesses.     

Recent Evidence on the Oil Price Shocks on Gulf Cooperation Council Stock Markets

The recent plunge in the price of oil affected many countries, especially major oil producers and exporters, such as the Gulf Cooperation Council (GCC), which accounts for half of the global oil reserves. This paper examines the impact of oil price changes on GCC stock markets, including Bahrain, Kuwait, Oman, Qatar, Kingdom of Saudi Arabia, and United Arab Emirates over a 10-year period, 2005–2015. We examine the direction of influence and influence absorption through Granger causality and impulse response function. The results are important for portfolio management at the international level, and provide insights for government and regulatory authorities in times of oil price change. Additionally, the evidence suggests the need for more economic diversification at the country level in the GCC region to mitigate high volatility in the event of oil shocks.     

Trans-border outshopping: an Arabian Gulf study

The study reported in this article examines intermarket patronage in an international context. Three groups of Bahraini consumers outshopping in Saudi Arabia are compared in terms of their sociodemographic characteristics, attitudes towards the Saudi market vis-d-vis the local market and product purchase behaviours. The article presents the results of the study and concludes with implications of the results for corrective marketing strategies.     

Prospects for the international oil market

The OPEC price conference in Geneva on May 25–26, 1981 did not resolve the disagreement among OPEC member countries over official prices. As a result of this stalemate, Saudi Arabia with its intention to moderate prices will in the foreseeable future probably not be prepared to make substantial reductions in its high volume of production with which it puts pressure on prices. What short- and medium-term perspectives for the international oil market arise from this situation?     

Source Country Characteristics and the Inflow of Foreign Direct Investment into Saudi Arabia

The paper examines the impact of source country characteristics on the inflow of FDI into Saudi Arabia using a gravity‐type model including economic, distance and socio‐political variables. A unique database listing all new investments involving foreign ownership is used to construct a panel of 33 countries in the period 1980–2005. To account for many country–year observations with zero FDI, the negative binomial regression, the Tobit regression and the Heckman selection procedure are used. The conclusions drawn from the analysis employing panel‐based techniques differ from the results obtained from pooled regression models. Also, the determinants of FDI differ depending on whether foreign investment is measured in terms of investment expenditure or the number of individual foreign projects. The Heckman selection results reveal that there are a large number of factors affecting the decision to invest in Saudi Arabia, compared with relatively few determinants of the actual size of investment. Traditional size and distance characteristics hold to a great extent but the relationship between FDI and bilateral trade is unclear and there is some evidence that the countries that export to Saudi Arabia do not invest there. In terms of scope for possible spillovers, there is mixed evidence on whether the investment comes from more technologically advanced economies but volume‐wise important investments originate from countries characterised by high income per capita.     

A Time Attitude Scale for Cross Cultural Research

Abstract

The paper describes the development and testing of a questionnaire instrument designed to assess the attitudes of individuals towards time. Five constructs are identified from the literature: past, present and future orientations, time pressure (or time as duration) and planning (time as succession). Scale items were developed and tested in four countries: the UK, Saudi Arabia, Thailand and Chile. In the last three mentioned countries, the questionnaire was translated into the home language from English using the back translation method. In total, 2,155 respondents completed the instrument. The scale is tested for reliability using Cronbach Alpha both as a whole and in its five constituent parts for each country. Convergent validity was tested using Structural Equation Modelling. Past and future orientations, and time pressure emerge as relatively well-defined constructs, reflecting their emphasis in the literature on time attitudes generally. The results are discussed in the context of cross-cultural research and in the context of a growing debate about the use of Cronbach Alpha as an absolute indicator for scale development.     

An evaluation of the red-light camera programme in the city of Dammam,the Kingdom of Saudi Arabia

This study evaluated the effectiveness of red-light cameras in Dammam, the Kingdom of Saudi Arabia. Two methods were used to assess changes in crash risk at the intersections at which the red-light camera programme had been operating. Geospatial analysis was used to visualize trends in road crash density over the geographical region of Dammam and a pre--post-camera crash analysis was undertaken. The distribution of injury crashes was greater than that of crashes which included property damage, the latter of which was concentrated around central Dammam. The five red-light cameras installed in 2012 were located outside areas of high-crash and injury density, and the total number of crashes reported in the three-month periods after installation was double that before the cameras were installed. This increase in the number of crashes also occurred at the five comparison sites (without red-light cameras), indicating a null effect. The findings from this study are contrary to previous evaluations of speed management programmes associated with red-light cameras. The study highlights the challenges in obtaining data for such research and illustrates that a reliance on overt, fixed camera's to manage speed is unlikely to deliver significant reductions in road trauma.     

A cross-cultural investigation of the relationship between eco-innovation and customers boycott behaviour

Retailers are under pressure to utilise eco-innovation to improve their operations and reduce customers boycotts as a result of the growing concerns of customers about environmental issues. Thus, this paper examines the effect of eco-innovation (i.e., reactive eco-innovation, proactive eco-innovation) on customers boycotts behaviours across various cultural environments. It also explores the role of ethical ideology (i.e., idealism, relativism) on this relationship. Based on psychological contract violation theory was used to develop our study model. We collected data from 3392 consumers from four different countries to test the study model. The results indicated that company's reactive eco-innovation is positively related to customers boycotts behaviour and this relationship is stronger in the developed societies (i.e., UK, USA) than in the developing societies (i.e., Saudi Arabia, Egypt). Furthermore, proactive eco-innovation has a negative effect on boycotts. This link is stronger in the in the developing societies (i.e., Saudi Arabia, Egypt) than in the developed societies (i.e., UK, USA). Psychological contract violation and environmental concerns were found to mediate this relationship. Moreover, our study found that idealism has a negative influence on boycotts while relativism has a positive effect on boycotts. Our study offers meaningful theoretical and managerial implications for retailers in different cultural contexts.     

Barriers to Franchising in Saudi Arabia

Franchising has rapidly grown in Saudi Arabia since 2005, yet a small number of the large companies dominate the market with mostly foreign brands. Therefore, the aim of this study is to investigate the barriers that Saudi small and medium enterprises and startups face when striving to become franchisors or franchisees. These barriers are investigated through the use of semi-structured interviews with people who belong to the franchise community either as administrators, franchise committee members, franchise developers, franchisees–franchisors, or prospective franchisees and franchisors. The results of this study show that there are several barriers standing against using franchising as a mode of expansion and investment by small and medium enterprises and startups, such as lack of legal, financial, institutional, marketing, development, and educational services support, and other key factors related to international franchisors' preferences and domestic franchising.