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1 Osama M. Ashri 24

2 3. CULTURE: A national culture, consisting of the beliefs and practices of a given society, plays a key role in influencing entrepreneurship. For example, a culture that encourages risk- taking and tolerates failure could have a substantial effect on cultivating conditions conducive for entrepreneurship. Furthermore, cultures could have an influence on shaping social perception around entrepreneurship. Studies have shown that higher entrepreneurial activity tends to be associated with cultures where entrepreneurs have high social status. 43 This section examines the prevailing culture in Saudi Arabia as it relates to entrepreneurship. It also includes a discussion of the role of the media and recounts some exemplary success stories within Saudi Arabia s entrepreneurial ecosystem. Through his prominent study, Greet Hofstede identified four dimensions along which the cultures of different nations could be arranged and analyzed. 44 These dimensions have implications for entrepreneurship and, therefore, represent important indicators with respect to the culture domain of the Saudi entrepreneurial ecosystem. Below is a brief description of each these dimensions followed by a graph depicting Saudi Arabia s scores. Power distance (PDI). It concerns the extent to which individuals of a given society expect power to be distributed unequally. Uncertainty avoidance (UAI). It expresses the degree to which a culture encourages risk- taking and tolerates ambiguity. Individualism vs. Collectivism (IDV). It concerns the degree of interdependence a society maintains among its members. Masculinity (MAS) vs. Femininity. It relates to the degree to which a society is driven by competition and achievement (masculine) or quality of life (feminine) 43 Etzioni, A. (1987), Entrepreneurship, adaptation and legitimation, Journal of Economic Behavior and Organization, 8, 2, For more details on this Hofstede s study, visit Osama M. Ashri 25

3 The following graph (figure 5) depicts Saudi Arabia s score in the four dimensions described above PDI IDV MAS UAI Figure 5: Saudi Arabia s scores on Hofstede s dimensions (Adopted from: hofstede.com/saudi- arabia.html) Saudi Arabia has been identified in this study as having high power distance, high levels of collectivism, relatively high masculinity, and high uncertainty avoidance. While all these dimensions have implications for entrepreneurship, perhaps the most immediately telling of these are power distance and uncertainly avoidance. Saudi Arabia scored high on this power distance dimension. People in cultures with a high score on this dimension tend to adhere more to a hierarchical order and, therefore, independence and creativity may be stifled. To the contrary, entrepreneurs usually have a high- level of independence and are more likely to operate within network- like structure where there s no chain of command that might impede their development and success. In addition, uncertainty is inherent in entrepreneurship and, as such, risk- averse culture is always noted as an inhibitor of venture- creation. Clearly, as shown in the study, Saudi Arabia s culture has a proclivity for avoiding uncertainty. In such a culture, the study finds, innovation could be resisted and security tends to be important to individual motivation The values given for each dimensions are averages for all the respondents in Saudi Arabia. This indicates that not everyone possesses that same attributes ascribed to the Saudi culture. 46 Retrieved from hofstede.com/saudi- Osama M. Ashri 26

4 Another study published in the 2010 GEM report 47 shows that individuals in Saudi Arabia exhibited high perception about the presence of opportunities in the country with a score of 75.8 (the average in the same category of factor- driven economy was 61.8.) In addition, perception about the capabilities to start a business was slightly below the average at 69.3% (average 71.5). Despite this high perception of opportunity and, to an extent, capabilities, only one percent of the people surveyed reported that they have intentions to start a business. The table below compares Saudi Arabia scores in each attribute studied in the GEM report with the average of factory- driven economies. Type of Economy Factor- Driven Country Saudi Arabia Average Perceived opportunity Perceived Capabilities Fear of Failure Entrepreneurship as a good career choice High Status to Successful Entrepreneurs Media Attention for Entrepreneurship Entrepreneurial Intentions Figure 6: Entrepreneurial attitude and perception in Saudi Arabia compared with the average of factor- driven countries in the GEM report 48 The results from the same GEM report of 2010 also show that media attention toward entrepreneurship and status is high in Saudi Arabia, compared to the average of all factor- driven economies. 49 According the report, media play an important role in shaping the society s impression about entrepreneurship. Media events, publicized awards, interviews, and speeches all have an impact. One of the noted programs that drew media attention is Saudi Fast Growth 100, which celebrates entrepreneurship by ranking the fastest- growing Saudi- based 47 Kelley D., Bosma N. & Amoros J. E. (2010). The Global Entrepreneurship Monitor 2010 Report. Babson Park MA: Babson College, London UK: London Business School and Santiago Chile: Universidad del Desarrollo. 48 See previous reference Factor- driven economy is defined on page 11 of this Osama M. Ashri 27

5 companies. The program also recognizes start- ups as well as women and young entrepreneurs. 50 In 2010, the 100 companies selected for the prize had grown an average of more than 40% a year for three or more years and collectively created 30,000 jobs. 51 More notably, such a visible celebration of these entrepreneurs is key to nurturing an entrepreneurial culture in the country. (Appendix F contains a list of entrepreneurship awards and start- up competitions along with their websites.) Visible Success Stories Can Move Mountains Visible successes can have an effect on igniting the spirit of entrepreneurship by inspiring other Saudis to start their own businesses. One exemplary Saudi entrepreneur, Naif Alqahtani, started his career as a forklift operator at the local branch of an international express delivery and logistics company. Within a short span of time, Algahtani climbed up the corporate ladder to head the logistics department, managing over 400 employees a lucrative job many Saudis might dream of. Nevertheless, Algahtani made the audacious decision to relinquish this sought- after corporate position and embarked on an entrepreneurial endeavor to found the now leading logistics provider in Saudi Arabia, Logistics Solution Services (LSS). Other equally inspiring entrepreneurs from this generation include Loai Nassem, who founded Lomar a high- end fashion design company that redefined the traditional Saudi clothing Thoub ; Osama Natto, a serial entrepreneur who is committed to helping young Saudis create the next one- billion dollar technology company; and Abudullah Munief, who defied the cultural mainstream by leaving a secure job to found a prime chocolatier brand in Saudi Arabia, Anoosh. These entrepreneurs, among others, occasionally share their entrepreneurial journeys at publicized venues such as local TEDx events and entrepreneurship forums. Making such inspiring success stories more visible can be a tremendous vehicle for eradicating the cultural barriers to entrepreneurship in Saudi Arabia. 50 For more information about Saudi Fast Growth 100, visit. 51 High intensity entrepreneurship article an all world Osama M. Ashri 28

6 Perception of Entrepreneurship: Survey Results A healthy entrepreneurial culture recognizes the crucial role entrepreneurs play in creating jobs. It also values their contribution to their community. A survey conduced for this report showed that Saudis image of entrepreneurs is relatively positive. The majority of the respondents in the survey looked favorably at entrepreneurs as job creators (Figure 7). However, the same respondents exhibited less favorable perception when asked whether entrepreneurs care about their own community besides their own interests (figure 8). 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 47% 44% 6% 3% Strongly Agree Agree Disagree Strongly Disagree Figure 7: Respondents perception of entrepreneurs as key drivers in job creation 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 42% 33% 16% 9% Strongly Agree Agree Disagree Strongly Disagree Figure 8: Respondents perception of whether entrepreneurs care for their community besides their individual Osama M. Ashri 29

7 An important point to accentuate here is that with generational shift comes new trends. The promising youthful population could play a tremendous role in driving an entrepreneurial shift in Saudi Arabia s culture. In another survey for this research, 63% of the respondents between the ages of said that they aspire to start their own business as opposed to working in either the public or private sector (figure 9). One major challenge, however, is converting such an inspiration into reality. Work for Government, 23% Start a business, 63% Private, 14% Figure 9: Percentage of respondents between the age of who aspire to start their businesses vs. taking on a salaried job in the government or private Osama M. Ashri 30

8 NOTE ABOUT THIS VERSION OF THE REPORT: THIS REPORT IS THE PRODUCT OF AN INDEPENDENT RESEARCH PROJECT THE AUTHOR CONDUCTED WHILE HE WAS AN MBA CANDIDATE AT BABSON COLLEGE. THIS IS A PRELIMINARY DRAFT OF THE REPORT. PLEASE DO NOT QUOTE OR CITE WITHOUT PERMISSION. YOU MAY REACH THE AUTHOR BY AT OASHRI1@BABSON.EDU NOTE ABOUT THE REPORT: PLEASE NOTE THAT THIS REPORT IS BY NO MEANS INTENDED TO BE INLCUSIVE OF ALL THE ENTREPRENEURSHIP- RELATED ACTIVITIES, INITIATIVES AND POLICY IN SAUDI ARABIA. RATHER, THE REPORT SERVES AS A BULEPRINT FOR UNDERSTANDING THE ENTREPRENEURSHIP ECOSYSTEM AS A WHOLE WITHIN THE CONTEXT OF SAUDI ARABIA. DETAILS ABOUT THE PURPOSE AND OBJECTIVIVES ARE INCLUDED IN THE INTRODUCTION SECTION Osama M. Ashri 31