Business and Entrepreneurship in Saudi Arabia. Burton Edward
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this chapter. This assessment includes a special focus on how the business community has met the challenges of increased foreign competition and more demanding regulatory environment since the Kingdom's accession to WTO membership in December 2005.
Chapter 2 scrutinizes Saudi Arabia's rush to innovation and the creation of a knowledge-based economy, as well articulated in its ninth national development plan. A discussion of the Saudi national science, technology, and innovation plan, promulgated by King Abdulaziz City for Science and Technology (KACST) in furtherance of its charter, is presented and its impact assessed. The chapter appraises the Kingdom's efforts to construct a permanent milieu for the nation's growing cadre of researchers, developers, and innovators. The chapter offers a general survey of major research and development projects underway in Saudi Arabia and offers examples of cutting edge studies in the applied industrial sciences. Work being done in this area by world-renowned institutions such as King Abdullah University for Science and Technology (KAUST) and its industry collaboration program (KICP), King Saud University (KSU) and its Riyadh Techno Valley, and KACST, particularly its Nanotechnology Centre of Excellence and BADIR program are highlighted. The chapter looks at the state of patent applications in the Kingdom and highlights the important work being done by the nation's patent authorities, the Saudi Patent Office (SPO), and the National Patent Office (NPO). Given that the operational condition, efficacy, and performance of a country's patent registration system is often a useful barometer on the health of innovation among its brightest people, useful figures are presented as to the demographics on the origin of patentable innovations within Saudi Arabia.
Chapter 3 assesses the enduring legacy of Saudi Arabia's family-owned businesses (FOBs). The chapter affords the reader a rare and brief look inside several of the Kingdom's best known and respected family establishments and appraises the historical significance of these businesses. Observing their humble beginnings in business, in some cases being the nation's first start-ups through vendor and supplier contracts with the precursor to Saudi Aramco back in the 1940s, 1950s, and 1960s, Chapter 3 delves into the role they continue to play in the Kingdom's commercial and industrial development. This chapter examines the transformation of these businesses into globally diversified commercial entities. We look at the challenges faced by these companies as they transition their corporate leadership from first to second generation, and from second to third generation as younger family members are integrated to their businesses. With an average of five children born to Saudi families, when the time comes to pass on control of a family business from a matured founder to a founder's relatives, there are often familial conflicts and thorny legal issues with which to contend, particularly when the death of a founder occurs.
This chapter also examines questions such as: What happens when an older generational leader or group of family leaders of a company, who were the guiding and authoritarian forces behind its growth and success over decades, begin to exit the day-to-day control of the company to make way for younger generational family owners and managers? This chapter devotes a portion of commentary on the corporate governance practices followed by Saudi FOBs and what that means for co-investors with these firms. This chapter presents the views of second- and third-generation Saudi FOB members on what changes in generational leadership means for Saudi FOBs from their perspectives.
Chapter 4 presents entrepreneurship in Saudi Arabia today from the perspectives of those engaged in business. The chapter looks at the definition of “entrepreneur” and what it means to be one in Saudi Arabia today. Examining the early definitions of the term “entrepreneur” from Irish-French economist and himself the quintessential entrepreneur, Richard Cantillon, and the views of Jean-Baptiste Say, the celebrated French economist and businessman who was among the earliest to attempt to define the word 200 years ago, this chapter looks at Saudis who have their own start-ups and established enterprises that have grown with aid from some of the Kingdom's governmental and private-sector-funded support entities and institutional incubators. We look at these business owners and how they chose their own paths to Saudi Arabia's commercial class.
Chapter 5 further explores what it means to be a Saudi entrepreneur facing the challenges and pursuing the rewards that differ greatly from those of the traditional path of one seeking long-term employment within government bureaucracies. This chapter surveys the great push to promote and assist startups and new growth businesses in the Kingdom by government institutions, chambers of commerce, and private enterprise. Instructional and funding programs such as Endeavor, Riyadah, the Centennial Fund, and the specialized approach to start-up promotion of TAQNIA will be viewed in Chapter 5.
This chapter further examines the phenomena of Saudi entrepreneurship and turns a discerning eye on understanding the motivational forces behind it. We take a look at what drives the entrepreneur in Saudi Arabia to break the stereotypical sedentary, often perceived apathetic Saudi youth more interested in social diversion than helping to advance the Kingdom's development interests through their own labor, ingenuity, and achievement. Where does the desire for self-achievement come from? Does the desire for Saudis to invent, improve, and apply new technologies or make “the next big thing” spring from the same fervor possessed by Steve Jobs as the phrase “fire in the belly” was reminted for him and other innovators in the high-tech industry? Because many Saudis and non-Saudis question whether young Saudis possess the same drive and passion for success older generations of Saudis undoubtedly exhibited in building their family owned businesses many decades ago, this chapter looks at whether today's Saudi business person has the same fire and passion for personal and commercial achievement. The chapter gives examples of how those engaged in promoting entrepreneurship see evidence of a strong spirit of excellence and a will to create and commercially prosper possessed by aspiring Saudi business people.
Chapter 6 recaps important themes in this book with a particular emphasis on what is on the horizon for business in the Kingdom. A view of the Kingdom's Tenth Development Plan (2015–2019) maps out the next five years of the country's growth plans. Chapter 6 presents the opportunities for business between Saudi and American companies that serve the mutual commercial and economic interests of both countries. The chapter will view some of the recent strategic alliances and partnerships between Saudi businesses and foreign investors that are shaping the competitive business environment in Saudi Arabia today.
At the outset, it is important for the reader to appreciate that I am an American on the outside looking in on Saudi Arabia. I say “on the outside” because I believe unless you are Saudi, it is impossible to have the genuine experience of knowing and appreciating all of the tremendous challenges and tectonic shifts one has to deal with on a daily basis in Saudi Arabia and truly view those changes for what they really mean. So, in my pursuit of authoring a balanced book on business in the Kingdom, I am presenting and filtering the commentary of others that hopefully serve as useful examples of alternative approaches to solving some of the Kingdom's challenges in working with and supporting the Saudi private sector. In the end, however, contextually, these are Western, and in particular, American perspectives. Notwithstanding these perspectives, one can be assured the Saudi-American relationship remains one of the most important sovereign-to-sovereign relationships either nation maintains with the world's nations.
American President Barack Obama has visited the Kingdom of Saudi Arabia in June 2009, in January and March 2015, and then again in April 2016. And since taking their respective offices in the Obama administration, Secretary of State John Kerry and Secretary of Commerce Penny Pritzker have had their own official visits to Saudi Arabia. These were no routine diplomatic courtesy calls. Most experts, analysts, and followers of U.S. – Saudi relations agree that the Kingdom and the United States have reached a historic crossroad in their 80-year-old relationship. Until January 23, 2015, all prior visits to the Kingdom by President Obama and the emissaries of his cabinet dealt with the late King Abdullah Bin Abdulaziz Al Saud. Upon King Abdullah's death, announced Friday, January 23, 2015, Saudi Arabia was launched into a period of profound and unprecedented transformation.
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