By Dean Hudson,2014-05-27 17:54
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    Business Values in Saudi Arabia

    a problem for international companies?International Business

    Chen Yongling 7084384

    May 25, 2012




    Saudi Arabia, officially called the Kingdom of Saudi Arabia, located on the Arabian Peninsula, is

    1the second-largest nation in the Arab world, with an estimated population of 27 million. Up to

    22011, Saudi Arabia’s GDP was 682.8 billion, ranking the first in the Arab world and second in

    Middle East. Also, as a member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabic is the largest petroleum exporter in the world. Foreign

    3Investments in the nation jump from $3 billion to $34 billion in only 6 years, which could

    indicate that more and more international companies are getting interested in doing business in Saudi Arabia.

    However, in contrast to its prosperity in economy, it is listed as the least democratic country in the

    4Middle East. Does this situation raise conflict between local culture and international business ethic? This essay is to explore what ethic delima an international company would face while doing business in this country and the possible alternatives to handle these issue.;Main focuses of Business Ethics in Saudi Arabia The Arabic term which is closest to "Business Ethics”, is Ekhlak El-Maha’ne (professional 5morality), an adaptation of the widely used phrase for the concept “religious morality”, indicating

    the significant role of its Islamic religious culture, which was strengthen by the puritanical Wahhabi sect of Islam, arosed 200 years ago and predominates in the present day country. Thus the Islam tradition governs every aspect of people’s daily life.

    6Religious Composition Saudi Arabia

    Sunni Moslems92%

    Shi’ite Muslims8%

    Due to this religious culture rooted in hundreds of years’ tradition, international companies from western culture may encounter certain ethical issues during their operation. The report would focus on twe heated topics concerning international companies doing business in Saudi Arabia: Women employment, kinship and milk kinship ties.

    1 "About Saudi Arabia: Facts and figures". The Royal Embassy of Saudi Arabia, Washington D.C. Retrieved 6 June 2011.2 "Saudi Arabia". International Monetary Fund. Retrieved 20 April 2012.

    3 SAGIA Saudi Arabian General Investment Authority

    4 The Economist Intelligence Unit’s 2010 Democracy Index

    5 Dove Izraeli, Business Ethics in Middle East, 1997

    6 Paula l. Nielson, Dec 15, 2009, Religion in Saudi Arabia


;Ethical Problems Exploration

    Women Emplotment

    Although women’s participation in the labor force of Saudi Arabia has trippled from 5.4% in 199278th to 15.16% in 2010, it still ranks the 180 of 184 countries in the world and ranks last in Middle

    East countries, while the average is 46.1% in the whole region. Among the educated women and women labor force, most of them are taught or working for education or service related occupations, while in other fields, you can hardly find a female employee.

    This unflavor employment market for women are caused by the country’s Muslim religion. In Muslim religious practise, women are considered to stay at home and take care of her children while men are supposed to work and support the family. Women in the labor force face heavy discrimination that if they want to apply for a job, they should be more educated and qualified than the male competitor.

    As for the international companies, when they are thinking of hiring a woman, they not only have to assess whether the candidate is qualified or not, but also have to take the inconvenience caused by sexual segregation for women in to acount. If they hire her, they would be in the situation that this employee cannot do many things on her own in this nation: she is banned to drive; she cannot go to certain places like government office; she cannot go on a business trip, open a bank account 7 Ministry of Economy and Planning; U.N. Development Programme (UNDP), “Millennium Development Goals,” Kingdom of Saudi Arabia, 2008

    8 the International Labour Union (ILO)


or get education if she is not permitted by her male 9guardian.

    Moreover, most of the Saudi women actually defend for

    this “guardian” system: In a 2010 interview with 10the New York Times, a working Saudi woman said:

    As a Saudi woman, I demand to have a guardian.

    My work requires me to go to different regions of

    Saudi Arabia, and during my business trips I

    always bring my husband or my brother. They ask nothing in return—they only want to be

    with me. The image in the West is that we are dominated by men, but they always forget the

    aspect of love. People who aren’t familiar with Shariah often have the wrong idea. If you

    want stability and safety in your life, if you want a husband who takes care of you, you won’t

    find it except in Islam.

    In this respect, rather than acting like a cultural relativist ---- directly refuse the woman candidate, to meet the Muslim principle that women are in subordinate status and should stay at home; or acting like an ethical imperialist ---- resist all values that are not consistent with the western ones and ban the employee’s male relatives from accompanying, even if that woman need this kind of 11protection; it is possible for the company to guide itself with the three ethical principle: First,

    respect for core human values by accepting the job application from a qualified and suitable woman candidate who is will to work and pursue her dream; Second, respect for local traditions by following Islam’s guardian system; Third, to belief that context matters that the woman employee herself needs protection and ways of love that other culture could not understand.Kinship Ties

    In Saudi Arabia, business operations are deeply influenced by their social relations of kinship or 12even milk kinship that give preference to family. Favoritism, nepotism, and personal connections

    do effects strongly on companies’ decisions (for a review of research, see Atiyyah, 1992). When facing the question like: “who is to be employed” “which supplier should the company choose” or “which employee is to be sent to negotiate with government”, companies would find themselves fell in the dilemma between the logically “best” one and the one with special kinship. Selecting the kinship, despite the better alternatives may seem unfair in western world.

     However, in the context of a family-based culture, establishing trust and friendship is premise of successful deals. They favor coping with relatives or friends, prefer “small talks” before formal 13meetings and face-to-face business conversation. Choosing a “qualified” stranger is not

    necessarily a better choice than behaving according to the local tradition. This issue is among the business practices that are called moral free space (Thomas Dunfee & Thomas Donaldson),being 14neither black nor white but exist in a gray zone. In this case, if acting “unfairly” could smooth

    9 al-Mohamed, Asmaa. "Saudi Women's Rights: Stuck at a Red Light". Retrieved 24 June 2010

    10 Zoepf, Katherine (31 May 2010). "Talk of Women's Rights Divides Saudi Arabia". The New York Times. Retrieved 19 September 2010

    11 Thomas Donaldson Values in Tension:Ethics Away from Home. Harvard Business Review

    12 Dove Izraeli, Business Ethics in Middle East, 1997

    13Jodie R. Gorrill, M.A. Intercultural Communication, Doing Business in Saudi Arabia, 2007

    14 Thomas Donaldson Values in Tension:Ethics Away from Home. Harvard Business Review


    the business process, earn a good deal and maintain

    satisfaction of the employees – as long as they do not

    go against core human values, why not?


    In today’s globalized business world, with all

    opportunities existing every corner in the world, how

    grab these opportunities under proper ethical

    principles in various culture becomes a significant issue for every internation company. This essay explores two major issues the companies may encounter in the Kindom of Saudi Arabia: women employment and kinship ties. Through discussions it comes out that rather than being trapped in ethical and traditional dilema, companies could try to find out a way to balance the home country value and the local custom by respecting both human core value and the specific culture, thus achieve the business goal effectively.



    Dove Izraeli, Business Ethics in Middle East, 1997

    Stefania Bianchi and Donna Abu Nasr, ‘Desert Rose’ Bank Founder Nahed Taher Says Saudi

    Women Should Work Harder, Oct 30, 2011

    Paula l. Nielson, Religion in Saudi Arabia , Dec 15, 2009

    Thomas Donaldson, Values in Tension:Ethics Away from Home. Harvard Business Review

    Jodie R. Gorrill, M.A. Intercultural Communication, Doing Business in Saudi Arabia, 2007

    The Global Competitivenenss Repot 2011-2012? 2011 World Economic Forum

    Foreign Investment in Saudi Arabia,



    Womens Employment in Saudi Arabia: a major challenge, Booz & Company


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