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The Effects of Differences in National Cultures to International Companies in Saudi Proposal


Abstract

Cultural difference is a fact that cannot be assumed in the world today, given the fact that organizations are going national each and everyday. In Saudi Arabia, national culture difference is more pronounced because there is no separation between the state and religion (Bowen 2008). Religion determines what is regarded as acceptable behavior in Saudi Arabia, and also prescribes the kind of business people can engage in because some products are not permitted by the Quran.

The effects of the cultural differences to firms especially those in the oil industry is far reaching, and goes from determining the employees a firm can hire to influencing the schedule of work because prayer time has to be observed. On top of that, mode of dressing is regulated by the Islamic laws and depends on the gender of the person thus influencing even the office attire (Long 2005).

Studies done earlier have tried to bring out the existing cultural differences, their causes, effects and strategies to deal with them but have failed to be specific. Along with that, data used by most of them has become obsolete. A multi-dimensional research methodology will be used to collect recent data which will be specific to ensure that the research addresses specific problems.

The results will be compared with conclusions from initial studies to highlight crucial points and thus draw conclusions which will help current and future players in the drilling industry who want to invest in Saudi Arabia or other countries with similar culture.

Introduction

For most multinational companies, cultural difference is a fact they have to deal with in their day to day operations given the fact that they operate in different countries which not only have different social orientation, but also varying religious backgrounds (Tehranian and Jeannie 2006).

Among the most affected companies are the oil and gas companies which have to produce in one country for example Saudi Arabia and sell to several countries across the world. It is therefore very difficult for any company to venture into international markets without taking into consideration the cultural differences that exist, how the differences will affect performance and how the same could be managed (Sylvie 2003).

Questions to be Answered

To get an idea of the topic, literature review of existing research is important to help in answering the following questions:

  1. What is culture?
  2. What national cultural differences exist?

And through empirical research:

  1. What is the preference of cultural differences in Saudi Arabia?
  2. Is there any relationship between national culture differences and productivity?
  3. How does the Islamic culture affect organizations?

Research Interest

Oil and gas companies are multinational thus they operate in more than one region and are therefore highly affected by cultural differences. On top of that, most of the major oil and gas companies that operate in Saudi Arabia are foreign and in most instances owned by Europeans. It can be noted that, in Europe there is separation of religion and the state while this is not present in Saudi Arabia (Maddox 1993).

These companies therefore, operate in regions with two very different cultures thus they make good study examples of how culture can affect organizations. In addition to that, Saudi Arabia is a country that holds its culture with high regard and has a more or less uniform culture among all its citizens which is guided by the Muslim teachings (Ramady 2010). These make Saudi Arabia the best country for the study because many other countries have sub –cultures which could make the study a bit clouded.

Literature Review

Culture can be defined as the collection of common believes, values and norms among a group of people which influences the behaviors, reactions and day-to-day activities of these people (Nelson and James 2012), besides determining what is generally accepted as proper conduct within the community.

It should be noted that, culture is not a trait that can be acquired by birth because it is not determined by hormones but is rather imparted into a person through the process of socialization as one interacts with other people. On top of that, it is important to note that culture is not very dynamic and the differences that exist have therefore remained relatively similar over a long period of time (Lewer and Hedrick 2007).

Along with that, Saudi Arabia is a strict religious country where almost everybody follows the religious requirements to the latter. This is different from most countries where there is a separation of the government from religion and most firms find this fact difficult to internalize.

While in most countries the rules and regulation are formed putting religion at the periphery, in Saudi Arabia religion is the ultimate determinant of what decisions will be adopted by the government (Triandis 2004). On top of that, while in the other world people mingle freely and have the freedom of doing whatever they want, in Saudi Arabia there is restriction on socialization especially on women.

Though this has somehow been eliminated, women are restricted not to work alongside men and in situations where these cannot be achieved then they should be separated from men using partitions (Schnelder and Barsoux 2003). Additionally, women are not allowed to take up some professions like engineering, driving and law thus the drilling companies will have to employ men only for these jobs. Along with that, women can only be served by fellow women or be accompanied by a male relative when they have to shop.

Time is not given so much importance among the Saudis as it is in other parts of the world. On the contrary, in Saudi Arabia people take there time talking before embarking on the business of the day and consider anyone who tries to be time observant as being intolerant as well as uncouth. In addition to that, it is the Saudi culture to keep their family and home affairs private which is contrary to what is practiced in other parts of the world (Javidan and Robert 2001).

Consequently, they do not allow business partners to visit them at home though, while at business meetings they casually invite their friends unlike other places where business meetings are private. On the same note, it is paramount to note that given the strictness with which the Saudi people observe their religion, foreigners are bound to experience cultural differences because religion is a very strong shaper of people’s attitude and behaviors (Moran, Harris and Sarah 2010).

Given the cultural differences that have been depicted to be present in Saudi, it is important for people to be aware of the effects they may have on their firms. Culture determines how people conduct themselves and these includes the attitudes that people will have towards work and how they will manage time.

On top of that, culture also influences national issues such as the socio-economical factors, political aspects as well as international relations (Kwok and Solomon 2006). It is the common belief in Saudi Arabia that personal relationships comes first before business and this highly affects the outcomes of various business dealings.

It is also important to note that, since culture involves internalization of norms it ends up influencing the social life of people thus determining the materialistic and individualistic aspects of life, as well as the willingness of people to change. This highly influences the probability that people will adapt to a certain way of life which is beneficial to an organization (Adler and Allison 2008).

In addition to that, the Islamic law requires that men and women cannot work together therefore, compelling separation of working stations if both men and women have to be employed which not only increases expenses but also prompts the change of rules of employment (Light 2003).

On the other hand, strict Muslim teachings discourage accident insurance and thus require businesses to operate by faith in God. Though the government has repealed this requirement, it is still practiced in some other places and highly affects organizations incase of accident where they might not have enough capital to start again.

For organizational development and enhancement to take place, cultural change is important (Cercik 1992) but Saudis are not ready to change that easily. Their culture gives status positions a high preference thus encouraging them to give priority to higher positions. Since drilling firms have more manual jobs than managerial positions, and given the fact that Saudis seldom accept labor jobs, firms will have a problem getting labor supply from the local people.

The language difference is also another cultural factor that highly affects information flow between people (Sun 2009). The drilling industry requires improved technological know how but Saudi Arabia suffers from dire shortage of skilled labor.

Though the companies will want to pass the knowledge to the local people, this becomes a problem because Saudi Arabia uses Arabic which is not so common with international companies. Researches which have been done show that transfer of information and knowledge highly depends on language and the rates are higher when people use the same language (Christopher 2006).

On the same note, culture affects other functions of an organization including the responsibilities of employees and not only how they relate to each other both in and out of the work place, but also how they relate to the organization in general.

In the Saudi culture a woman comes second to a man and thus men believe that they should always be the ones to lead. It will be therefore difficult if not impossible for the companies having departments headed by women to thrive because the morale of men working under women will be affected thus affecting output.

On top of that, the way employees are treated must also conform to the Saudi culture because the Saudis view their culture as being superior compared to other cultures (Ball and Walter 1999). They will therefore be unwilling to work under certain conditions, for example together with women, which means that any firm must have separate working stations for both women and men. This is in it self a problem because, nowadays there are many women graduates than men in Saudi yet they are not supposed to handle some duties.

To thrive in a foreign country, managers have to study the ways of the people there and ensure that they understand them. It is therefore paramount that managers should avoid ethnocentrism and parochialism but be rather ready to adapt to the local culture.

Trying to bring a total overhaul of affairs will not only meet resistance from the locals, but will also make it difficult for the company in a place like Saudi Arabia (Inglehart and Wayne 2000). In Saudi Arabia religion comes first before other issues for example, work which is contrary to other cultures where work is given priority to religion. It is therefore vital that any organization gives this a serious thought.

It is a routine in Saudi Arabia that men should pray five times a day and companies should provide for these. But some of this prayer periods fall on work time and company’s precious time might be wasted if the men are allowed to go out. Managers can therefore provide the men with places to pray within the premises of the company.

This will save time that would have been wasted moving to look for places to pray as well as send information that the company respects the Muslim religion thus, improving the morale of employees and consequently their output (Abdallah 2001). On the same note, Islam religion which the Saudis observe requires that people should fast in the month of Ramadan and Muslims are taught to be inactive at that period.

On the contrary, research has shown that despite activities being low during Ramadan, the productivity of the Muslim is not affected. However, firms which feel that employees do not perform to their best during the day when they go without food may introduce night shifts to get the maximum out of each employee (Deresky 2008).

Saudis are quite unwilling to do manual jobs (Kogan 2003) which are the bulky and the main jobs in the drilling industry and thus, for a company which will entirely depend on Saudi labor there will be a problem. Companies can choose to employ foreign people who will be more willing to take up the jobs.

On the same note, the foreigners will in most cases either have the knowledge required or will be willing and easy to teach since language might not be an impediment. Along with that, reward based on performance can be a good strategy to motivate the employees in Saudi because this increases productivity of people from all cultures (Russell 2007).

It should however be noted that, the international firms can also include the locals in their management team to ensure that cultural issues can be addressed accordingly. Additionally, continuous training on matters appertaining cross-cultural issues is really important in improving capabilities and flexibility among the employees (Mead and Tim 2009).

Relation to Previous Studies

The previous studies carried out concentrated on the use of cultural frameworks to study national cultural differences yet the frameworks are known to be subjective. Additionally, the studies generalized the results of one country and assumed the same could be used to all other countries of the same region (Hodgetts, Luthans and Jonathan 2005) which is not necessarily true.

In addition to that, most studies were carried out a long time ago and the data used is outdated and does not reflect the recent changes in the Saudi government, for example the loosening of restrictions on women. Other than that, some of the strict Islamic rules are not observed nowadays and the effect of this is not depicted in earlier researches (Ahlstrom and Garry 2009).

It is also important to note that culture is specific and cannot be studied from one side only which is a mistake done by many earlier researches. The cultural difficulties encountered by other firms in other Muslim countries may not be the same as those faced in Saudi Arabia’s drilling industry as other studies may put it, hence the need to carry out the study specifically for Saudi Arabia.

Methodology

The research proposes to employ a multi-dimensional method of study whereby surveys, interviews, literature review and cultural frameworks will be used. This has been chosen because of the ability to get a variety of results thus enabling comparison across the board to increase precision and validity of the results.

Literature review will help in providing knowledge into existing information about the topic as well as providing an idea of what exactly has been studied regarding cultural differences and organizational performance (Pagell, Katz and Chwen 2005). The literature review will therefore be concentrated on books, journals, credible websites, newspapers and other peer reviewed scholarly articles about the topic.

On the same note, cultural frameworks have been used by many scholars in the past to study the cultural differences (Sirmon and peter 2004), and though they are not as objective as may be required they will provide a good platform to understand national cultural differences (McSweeney 2002).

On top of that, surveys and interviews will provide first hand information of what is actually happening on the ground, besides presenting the opportunity of participating and thus fully understanding the effect of the cultural differences. Additionally, the two will enable collection of recent data as well as paving way for understanding how recent social-cultural changes are affecting organizations.

The research will interview 20 people comprising of company managers, employees and other independent people in the oil industry using questionnaire to increase objectivity. The interview questions will mainly focus on the difficulties that managers face in Saudi Arabia compared to other areas, whether employees are satisfied with the mode of management and what they could like to be changed.

Language, masculinity/femininity, individualism and religion have been chosen to be cultural aspects of study because of the weight placed on them by cultural frameworks. On top of that, results on these aspects are easy to compare with result from previous studies. On the same note, the research will carry out 50 company surveys which will ensure statistical significance of the data collected. Data collected will be tabulated and graphed to generate results to compare with results from previous studies.

Conclusion

Saudi Arabia is a country that has strict rules and guidelines based on Islamic religion and every citizen is expected to follow the same. On top of that, the Saudis are ethnocentric and expect that every foreigner should adapt to their way of doing things without any objection.

Any organization setting up there is expected to conform to the Islamic expectation and conduct its operations within the provided framework no matter what the situation maybe from the mother country. It is therefore interesting to study how multinational firms especially the oil and gas industries carry out their operations in Saudi Arabia given the cultural divergence with the other countries where they operate.

Works Cited

Abdallah, WM 2001, Managing Multinationals in the Middle East: Accounting and Tax Issues, Greenwood Publishing, Westport.

Adler, NJ & Allison, G 2008, International Dimensions of Organizational Behavior, Cengage Learning, Hoboken.

Ahlstrom, D & Garry, DB 2009, International Management: Strategy and Culture in the Emerging World, Cengage learning, Hoboken.

Ball, DA & Walter MC 1999, International Business: The Challenge of Global Competition, McGraw Hill, Boston.

Bowen, WH 2008, The History of Saudi Arabia, Greenwood Publishing group, Westport.

Cercik, P 1992, On Track with the Japanese, Kodansha International, New York.

Christopher, EP 2006, “Leading Cultural Research in the Future: A Matter of Paradigms and Taste,” Journal of International Business Studies, vol.37, no.6, pp.922-931.

Deresky, H 2008, International Management: Managing Across Borders and Cultures, Prentice Hall, London.

Hodgetts, RM, Luthans, F & Jonathan D 2005, International management: Culture, Strategy and Behavior W/OLC Card Mp, McGraw Hill, Boston.

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Kogan Page 2003, Middle East review, Kogan Page Publishers, Center City.

Kwok, CC & Solomon T 2006, “National Culture and Financial Systems,” Journal of International Business Studies, vol.37, no.5, pp. 227-247.

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Light, DA 2003, “Cross-Cultural Lessons in Leadership,” MIT Sloan Management Review, pp.5-6.

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Maddox, RC 1993, Cross-Cultural Problems in International Business: The Role of Cultural integration function, Quorum Books, London.

McSweeney, B 2002, “Hoftede’s Model of National Cultural Differences and their Consequences: A triumph of Faith-A Failure of Analysis,” Human Relations, vol.55, no.1 pp.89-118.

Mead, R & Tim, G 2009, International Management, John Wiley and Sons, Stanford.

Moran, RT, Harris, PR & Sarah, M 2010, Managing Cultural Differences: Global Leadership Strategies for Cross-Cultural Business Success, Routledge, London.

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Pagell, M, Jeffrey P & Chwen S 2005, “The Importance of National Culture in Operations Management Research,” International Journal of Operations and Production Management, vol.25, no.4, pp.371-394.

Ramady, MA 2010, The Saudi Arabian Economy: Policies, Achievements, and Challenges, Springer, New York.

Russell, MB 2007, The Middle East and South Asia, Stryker-post Publications, Harpers Ferry.

Schnelder, SC & Barsoux, JL 2003, Managing Across Cultures, Prentice Hall, London.

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Sun, H 2009, “A Meta-analysis on the Influence of National Culture on Innovation Capability,” International Journal of Entrepreneurship and Innovation Management, vol.10 no.3-4, pp. 353-360.

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Tehranian, M & Jeannie L 2006, Globalization and Identity: Culture Diversity, Religion and Citizenship, Transaction Publishers, Piscataway.

Triandis, HC 2004, “The Many Dimensions of Culture,” Academy of Management Executive, vol.18, no.1, pp. 12-23.

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IvyPanda. (2020, April 30). The Effects of Differences in National Cultures to International Companies in Saudi. Retrieved from https://ivypanda.com/essays/the-effects-of-differences-in-national-cultures-to-international-companies-in-saudi-proposal/

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"The Effects of Differences in National Cultures to International Companies in Saudi." IvyPanda, 30 Apr. 2020, ivypanda.com/essays/the-effects-of-differences-in-national-cultures-to-international-companies-in-saudi-proposal/.

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IvyPanda. "The Effects of Differences in National Cultures to International Companies in Saudi." April 30, 2020. https://ivypanda.com/essays/the-effects-of-differences-in-national-cultures-to-international-companies-in-saudi-proposal/.

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IvyPanda. 2020. "The Effects of Differences in National Cultures to International Companies in Saudi." April 30, 2020. https://ivypanda.com/essays/the-effects-of-differences-in-national-cultures-to-international-companies-in-saudi-proposal/.

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IvyPanda. (2020) 'The Effects of Differences in National Cultures to International Companies in Saudi'. 30 April.

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