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The influence of the UAE context on management practice in UAE business

by André de Waal and Miriam Frijns

  • Purpose – This paper aims to investigate whether the United Arab Emirates (UAE) business context as described in the literature still The influence of the UAE context on management practice in UAE businessmatches with the UAE business context in practice. In many managerial publications, and even in quite a few academic ones, warnings are given about the different and difficult business environment which exists in Arab countries. This environment is allegedly characterized by a high religious influence, a definitive centralization of power, a strong family and tribal culture and a strong role of wasta, which makes doing business in the Middle East arduous. However, the context of the UAE is not typical Arab, as it is very much multicultural with many expatriates working in both local and foreign companies.
  • Design/methodology/approach – The theoretical aspects of the UAE business context were derived from a literature study. The aspects of the UAE business context in practice were collected during interviews with 36 Emirati and Western and Eastern expat managers working in the UAE. Subsequently, the theoretical aspects were matched with the practical aspects.
  • Findings – The matching shows that the typical Arab business setting is still there but that it exists next to the international business setting.
  • Research limitations/implications – Because of the coexisting cultural business settings, more nuance is needed in describing the typical Arab elements of the UAE business context, to fully understand the way of operating in the UAE.
  • Originality/value – As during this study a cross section of nationalities working in the UAE, including Emirati, was interviewed, it gives an unique insight into the current state of affairs in the UAE.
  • Keywords – United Arab Emirates, Culture, Business context
  • Paper – type Research paper

1. Introduction

The literature on doing business in Arabic countries frequently warns for the specific context these countries provide and which is quite different from especially the Western context. Differences in the context are, among others, the relative young age of these nations, the strong emphasis on religion, the extreme rapid economic development in the past 50 years, the tribal and family nature of society, the big role of relationships (wasta) in doing business and the centralized nature of power in both the countries and its organizations, which all have effect on the contemporary business environment (Ali, 2005; Stephenson et al., 2010). One of the main differences between the Western and the Arab contexts is that in the latter context, cultural values and religion values are very much interwoven. The Arab context is characterized by being a religion state, whereas the Western context is characterized by being a secular state. Because of these interwoven values, it is difficult The influence of the UAE context on management practice in UAE businessto get a clear insight into what typical local cultural aspects and what typical Islamic cultural aspects are. To make it even more complex, in the case of United Arab Emirates (UAE) – because of the presence of a dominant international workforce – the values that drive the way of doing business are often seen as solely international business values. At the same time, researchers are indicating that there seems to exist some tension between the Arab culture and the business culture in the UAE, and in addition that neither Western nor traditional inherited Arab management techniques seemed to have worked adequately enough in improving local organizations (Branine and Pollard, 2010). The countries organized in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) – and especially the Emirate Dubai – provide for a challenging research environment which in itself is different from other Arab countries. This is the case because Dubai, although originally just like the other GCC countries heavily dependent on oil revenues, has transformed itself into a country with a strong financial and tourist economy which has attracted many multinationals and foreigners who set up shop in one of the many so-called free zones (Bardot, 2013; Stephenson et al., 2010). The UAE economy suffered greatly during the financial and subsequent economic recession, but currently, the Emirates are investing again. In addition, its population consist of only 8 per cent locals (“Emiratis”), 7 per cent Arab population and 85 per cent expatriates mainly from Asia (Bardot, 2013): it is not uncommon for a large organization in theUAEto have a working population representing more than 40 nationalities. Not unsurprisingly, this mix of cultures produces cross-cultural miscommunications, tensions and even conflicts and inefficiencies. Sometimes, these problems stem from language difficulties (El-Amouri and O’Neill, 2011; Khuwaileh, 2003), but often, poor levels of interpersonal relations, lack of trust or misunderstood values contribute to these issues (Al-Ali, 2008; Kuehn and Al-Busaidi, 2000). For example, Western managers sometimes comment that the capacity of their non-Western colleagues to change their behavior, language and values according to pragmatic needs is both unexpected and disconcerting, while simultaneously non-Western managers complain that Western managers are inflexible, intolerant and unwilling to adjust to local conditions. The resulting loss of trust on both sides is inimical to economic cooperation and productivity (Aboyassin, 2008; Ahmed and Salas, 2008). Finally, the Western influence has created an atmosphere in Dubai which can be described as “Dubai allows Muslims to be Western-style consumerists, while still feeling true to their faith” (Nasr, 2009, p. 31). This context could be described by the term “cultural hybridization” which stands for the process by which cultures around the world adopt a certain degree of homogenized global culture while sticking to aspects of their own traditions. El-Adly (2007) notes that the recent development in the UAE of shopping malls with their Western brands plays a major role in shaping the shopping patterns of Arab consumers but, at the same time, does not erase the importance of national origins.

Thus, the UAE context has characteristics of both the Arab and Western cultures which makes it an interesting setting for doing research in how to adopt Western management techniques in such a way that they are suitable for the UAE context. Research into the applicability and effectiveness of management techniques has to take the context in which these techniques are to be applied into account (Holtbrügge, 2013; Rees-Caldwell and Pinnington, 2013). Literature has shown that management techniques, which often originate from the Western world, cannot indiscriminately be transferred in non-Western contexts (Blois, 1991; Boyacigiller and Adler, 1991; Branine and Pollard, 2010; Elbanna and Gherib, 2012; Vengroff et al., 1991). Thus, there is often inconclusive proof on whether importing Western management practices into non-Western organizations indeed improves performance (Al-Husan et al., 2009). At the same time, research on globalization increasingly finds that the transfer of management techniques from one country to another is leading to similar patterns of behavior across these countries (Costigan et al., 2005; van der Stede, 2003).

The study described in this paper identifies the typical Arab cultural aspects described in the literature and examines these in day-to-day business life of the UAE, with a specific focus on Dubai. The aim of the study is to evaluate whether the warning in contemporary literature about the different business context in the UAE, and specifically Dubai, is supported by findings in practice. For this evaluation, firstly, based on an extensive literature review, the characteristics of the UAE business context are identified. Secondly, managers from UAE organizations are interviewed on their experiences about the UAE business context. Thirdly, the theoretical characteristics and the practical experiences are matched, to build a picture of the contemporary business context in the UAE. The importance of this exploratory research lays in its contribution to the ongoing discussion of the applicability of Western management techniques in non-Western contexts, in this case, the UAE context (Mellahi and Budhwar, 2010; Stephenson et al., 2010). Mansour and Jakka (2013) state that the current literature on the UAE business context seems to be outdated and should be replaced with new notions on business environment characteristics. These new notions are especially important and needed in the light of the strong need and drive for excellence and high performance in UAE organizations. Also, a systematic understanding of the context in which Arab managers operate will help the introduction of management techniques tailored to the local situation, so that these are better able to support these managers in their quest for excellence. As Branine and Pollard (2010, p. 712) put it: Understanding Islamic management principles could help to develop a more appropriate type of management best practice in Arab and Islamic countries while still benefiting from the transfer of relevant Western management techniques and Western technology.

2. Theory on the UAE business context

A review of the literature yields several aspects which influence the UAE business environment. Those aspects can be divided in religion, globalization and cultural aspects (or a combination of these). Each of the aspects consists of values and (business) practices. The values are the underlying driving forces for the (business) practices in a culture. Most of the aspects described in this literature review originate from general characteristics of the Arab business context, while some are specific to the Gulf region, the UAE or Dubai. Only those aspects have been selected that are mentioned in at least three literature sources, so there is a certain degree of generality.

2.1 Religion aspect: Islam influence

The characteristic which, according to the literature, has the most effect on individual and group behavior in Arabic countries is the Islam. Research shows that religious beliefs and values have significant effects on behavior in the workplace, job satisfaction, leadership styles and organizational effectiveness and performance (Mellahi and Budhwar, 2010). A key concept derived from the Islam faith is the Islam Work Ethic (IWE), which implies that: […] work is a virtue in light of a person’s needs, and is a necessity for establishing equilibrium
in one’s individual and social life. IWE views work as a means to further self-interest economically, socially and psychologically, to sustain social prestige, to advance societal welfare, and reaffirm faith (Ali, 2005, p. 52).

Arabic scholars have translated the IWE into four implications for the business world (Ali, 2005):

  1. IWE puts an emphasis on hard work, meeting deadlines and persistence;
  2. IWE views work not as an end in itself but as a means to foster personal growth and social relations;
  3. IWE sees dedication to work and work creativity as virtuous; and
  4. IWE sees justice and generosity in the workplace as necessary conditions for society’s welfare.

The literature on Islamic values stresses the following values that are applicable to general behavior as well as behavior in the workplace: equality, accountability, consultation, goodness, kindness, trust, honoring promises, commitment, sincerity, justice, hard work, humility, universalism, consensus, self-discipline, persistence and cooperation (Ali, 2005; Branine and Pollard, 2010). Many of these values are derived from ehsan, a concept that dictates individual and group interaction within organizations to focus on goodness and generosity (Branine and Pollard, 2010). Islam is thus seen by many Arab Muslims to be the uniting aspect of their lives and cultures, and: […] is perceived as the only aspect in their lives that has not been shaped or colonized by the West, being the only non-European culture that has never been completely vanquished (Kamla and Roberts, 2010, p. 455). Therefore, the Islam, IWE and Islamic principles have a profound influence on the operations of an Arab organization (Ali and Al-Owaihan, 2008; Hammoudeh, 2012; Whiteoak et al., 2006).

2.2 Globalization aspect: workforce diversity

As mentioned in the Introduction section, Arab nationals only account for a maximum of 15 per cent of the population in the UAE, while the remainder consists of expatriates (“expats”) originating from Asian countries and – in a smaller proportion – from Western countries like the USA and the UK. These expats are needed, as the local population is not large enough to fill all the jobs required to sustain the economies of the UAE, and in fact, they played a big role in the rapid economic development of the region.The influence of the UAE context on management practice in UAE business
The expats are recruited on local contract terms and tend to stay only for a limited number of years. The majority of the local Emirates are employed in governmental and semi-governmental organizations, while currently, the Dubai Government conducts a so-called Emiratization program in which companies in the private sector are pushed to employ more Emirates by setting strict target quotas of locals within the workforce (Al-Ali, 2008). Many of the expats work in jobs which are deemed by locals to be “unworthy”, such as mechanics, cleaning, waitressing and retail jobs. The locals, both in the private and the governmental sectors, are paid more than expats and in general also make quicker promotions (Bardot, 2013; Jabeen et al., 2012; Kuntze and Hormann, 2008; Nasr, 2009; Neal, 2010; Stephenson et al., 2010; Whiteoak and Manning, 2012). This cultural diversity has a risk of poor communication and aggravates the task of managers to create an effective and efficient workforce. Thus, to be effective managers in the UAE, they have to recognize and understand cultural differences (Enshassi and Burgess, 1991; Khan et al., 2010). Diversity can also be sought to foster creativity and innovativeness in the organization and thereby increasing organizational performance. This diversity has to be found in differences in gender, race, culture, education, experiences, age and other personal characteristics (Khan et al., 2010). The latter is a value aspect of diversity and is not described in the literature as a typical value of Arab cultures. Arab culture, in its Islamic values, does see work creativity as virtuous but does not link that to the practice of employee diversity.

2.3 Cultural aspect: power centralization

Underneath the modernity of the Gulf States, the old political and social orders remain largely intact, and a manifestation of this is the central position of the ruler in these societies (Kamla and Roberts, 2010). Thus, old power structures remain very much intact, such as the decision-making power which, in many organizations, is still centralized at the senior level. This also ties in with the need for an Arab leader who can be seen as “The Strong and Trustworthy”, a leader who is upright, flexible, resilient and capable of execution decisions – in short, who can lead others (Al-Huzem, 2011). Arab organizations are often structured according to the principle of sheikocray in which managers see the organization as their personal fiefdom, while their autocratic behavior is kept in line by considerations of what is acceptable or not by society, the rule of religious law, a concern for the public image, a paternalistic orientation and Islamic instructions, to avoid oppression and abuse of power. Sheikocray is characterized in the following practices (Ali, 2005): hierarchical authority; a subordination of efficiency to personal relations and connections; an open-door policy so managers are approachable; indecisiveness in decision-making because of often extensive consultation; rules and procedures which are contingent on the personality and the power of the individuals that make them; nepotism in selecting upper-level managers while qualifications are emphasized for middle- and lower-level managers; informality among lower-level managers; and a patriarchal attitude. One of the effects of sheikocray is that one-way communication systems between managers and employees exist in many Middle Eastern organizations, employees’ opinion is not always listened to (Suliman and Abdulla, 2005) and Arab management does not excel in open communication, dialog and involving employees (McLaurin and Mitias, 2008). This ties in with Hofstede (2001) who characterized Arab cultures as having a high power distance. However, recent research reports that “in progressive organizations across UAE, a new kind of relationship grounded in mutual trust and respect is emerging between employers and employees” (Suliman and Al Kathairi, 2013), which could indicate that management techniques like empowerment is gaining some ground in UAE organizations.

2.4 Cultural and religion aspect: conflict avoidance

A highly regarded quality in Arabic society is self-censorship. This means that people avoid disclosing the wrongdoings of others, and when an individual speaks about the lagging performance of another person, the group will automatically censor this individual. Thus, there is a fear of exposure of incompetence, criticism cannot be freely voiced and conflict situations are avoided or kept under control (Ali, 2005). There is a general reluctance to initiate rigorous assessments of individual performance because of the importance of saving face in the local culture (Bardot, 2013). In addition, managers avoid punishing employees, as it contradicts the desired image of the “upholder of justice, mercy, goodness and kindness”. They rather use cultural norms and values, coupled with informal approaches, to manage their employees. Employees in Muslim societies are thus more open to managers that use persuasion, concession, kindness and identification with them (Ali, 2005, p. 115). As honest feedback might rebound unfavorably within UAE organizations, standard practice in the Arab culture is to
employ a mediator to deliver the feedback to avert open conflict (Idris, 2007).

2.5 Cultural aspect: management style

Islam teaching obliges leaders to consult and seek advice before making any kind of decision (Al-Huzem, 2011). As a consequence, Arab executives predominantly prefer the consultative style of management, in which managers informally consult their subordinates after which they make a decision. A variation on this is the pseudo-consultative style in which managers will consult their subordinates without necessarily taken their ideas and suggestions into account when making the decision. Two other styles Arabic managers tend to use are the participative style, in which managers share and analyze problems with their subordinates, evaluate alternatives and then come to a majority decision; and the autocratic style, in which managers make their decisions without consultation of their subordinates. Finally, a management style which is not often found is the delegatory style, in which managers ask their subordinates to make decisions on their own (Ali, 2005; Branine and Pollard, 2010; Randeree and Chaudhry, 2012; Stephenson et al., 2010; Yousef, 1998).

2.6 Cultural aspect: wasta

wasta-1The use of wasta is prevalent throughout the Arab world and plays a role in many important and significant decisions (Branine and Pollard, 2010; Stephenson et al., 2010; Whiteoak et al., 2006). Wasta traditionally refers to the act of a person mediating or interceding on behalf of another party. Other terms are Wasata which is the mediation itself, and wasata which is the person who does the mediation. Wasta is seen both as positive and negative. Positive in the sense of legal and moral, when it is used for solving conflicts or during “normal” relationships between people. Traditionally, responsible authority figures exercised influence through intermediaries practicing wasta, and it was also common practice – just like in basically all countries in the world – of working through relation networks of friends and extended families. Wasta becomes negative, questionable and illegal when it is used for the acquisition of economic benefit in violation of existing rules and procedures. It is corrupting when people obtain favors that normally would not be granted by a decision-maker, or when they are motivated by bribes rather than loyalty to an extended family, institution, or responsible leader (Hooker, 2009). Wasta can play a key role in the career success of managers, as it aligns with the informality of relations that exist in Arab work places (Metcalfe, 2006). In fact, the absence of wasta can be “fatal” to the success of managers in the Middle East in the same way that the absence of networking and mentoring relations hinders the career success of managers in Western countries (Tlaiss and Kauser, 2011). Another role wasta has in organizations is in influencing hiring decisions, whereby the employer is influenced by the intermediate party practicing wasta to hire a specific person, thus setting aside potentially more suitable candidates. In this respect, wasta employment practices are discriminatory and often illegal. Thus, sometimes wasta can act as a hindrance to practicing good governance in Arab organizations (Al-Ali, 2008; Whiteoak et al., 2006).
Tensions are nowadays appearing, caused by an “old order” which is bound by wasta networks which create inequities, and a “new order” which is more dynamic, more in line with international human resource practices, and which is rolling back the “old order” (Neal, 2010). As the same time, younger UAE nationals seem to feel more concerned about wasta than their older countrymen because they do not see themselves as having a great deal of access to it and, thus, fear to be disadvantaged by it (Whiteoak et al., 2006).

2.7 Religion and globalization aspects: achievement and excellence

Several authors have commented that the Arab culture does not appear to be necessarily committed to values that favor competence, but instead puts more value in ascription and prestige prevailing over performance. These authors also state that employers complain about Emirati who do not seem to be very hard-working or interested in excelling at what they do (Hooker, 2009; Whiteoak et al., 2006). At the same time, there is a strong drive for excellence under the leadership of Abu Dhabi’s ruler, Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, and Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum (McLaurin and Mitias, 2008), as illustrated by one of their statements: “Development is an ongoing process and the race for excellence has no finish line” (HH Sheikh Mohammed bin Rashid Al Maktoum, 2012). The rulers have introduced several excellence awards, first for the public sector and, subsequently, for the private sector. As a result, terms as efficiency, effectiveness, value for money, customer service and total quality management are “in high vogue in the UAE nowadays” (Mansour and Jakka, 2013, p. 98) and “our reality is that excellence is our only option” (Al Gergawi, 2009, p. 45). As HH Sheikh Ahmed Bin Saeed Al Maktoum (2009, p. 39) puts it: “Dubai’s vision can be simply stated. We try to excel in everything we do, and everything that we plan to do.” This attitude is compounded by the need to increase productivity of both the public and private sectors to reduce UAE’s dependency on expatriate labor (Mansour and Jakka, 2013). However, research shows that the attitude of employees in UAE organizations is not yet positive toward especially total quality management (Mansour and Jakka, 2013), and that management of UAE public agencies is not always convinced of the need to change to a high-quality organizations (McLaurin and Mitias, 2008). The former might be caused, as research among almost 9,000 employees in the Middle East by the employment agency Bayt (2009) showed, by a lack of recognition from managers of their employees causing a decrease in productivity and being a main cause of employee turnover….

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