Globalization in saudi arabia research paper

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To study the CSR logics in the GCC region, a folder was created for each country and journal articles, book chapters and review publications analyzing CSR practices, expressions, and connotations in each country were downloaded.

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Through content analysis, the information was extracted from statements that are collectively used to draw conclusions on each institutional order logics and their interface with CSR. The analysis is inductive in nature where extracted statements provide evidence in relation to the nature of institutional logics of each country and their amalgamation with western assumptive CSR logics, in order to draw conclusions in relation to salient CSR logics in each context. Each of the following sections of the chapter 3—7 discusses the institutional order-CSR logics interface: Section 3 discusses CSR logic at the state level where regulations, policies, and decisions are made on a national level; Section 4 relates religion dominant moral values, belief systems and world view to CSR practices; Section 5 looks into CSR-market logic which captures the compartmentalization and pricing of human activity in neo-liberal market economics; Section 6 discusses CSR from a corporate institutional order which is a hierarchal structure organizing and facilitating neo-liberal market economics and Section 7 will relate CSR to family ownership and family ties.

Finally, Section 8 presents the discussion of the results with concluding remarks and recommendations. A recent report published by the Arab Forum for Environment and Development recognizing the transition to sustainable practices as a necessity for the region to secure a path towards a sustainable future [ 14 ]. The GCC governments seem to play an integral role in achieving the necessary goals set by the Arab Forum. CSR logics however have unique expressions in each national context.

Although these contextual differences exist in highly developed nations, literature points to higher heterogeneity among emerging economies [ 15 ]. For example, even in a single country such as the UAE, differences are prevalent between the different emirates and how their economies are run [ 15 ].

An overview of Saudi Arabia’s economy and the state of their economic progress:

Due to the recent downfalls in the oil economy, the government is attempting to diversify its national economy and is consequently encouraging and supporting the private sector in its significant role and participation in its vision [ 16 ]. It has been mentioned in the literature that there is a lack of legislation or an institutionalized system for CSR; this has resulted in fragmented efforts with a low level of overall strategic strength [ 17 ]. Governmental and legislative factors including high bureaucracy, labor laws, corruption, legal systems, and investment regulations are major challenges for CSR implementation [ 18 ].

The government passed a legislative requirement through the Saudi corporate governance CG code, which requires firms to have an audit committee with at least three non-executive directors and at least a financial and accounting director; this code had a positive impact on CSR disclosure with a higher number of companies registered by research studies post its application [ 13 ].

However, it can be argued that this is a non-intentional CSR impact, where more direct legislative policies are required for promoting CSR. The governmental initiative aims at monitoring and evaluating CSR strategies of leading companies through social, environmental, economic, management, and stakeholder participation metrics [ 16 ]. However, issues of human and labor rights, corruption, and environment are pressing international issues that are of concern to CSR global standards; and these concerns are not addressed by SARCI [ 19 ].

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The UAE is a fast-developing country with a growing economy. It has large oil reserves particularly in the Abu Dhabi Emirate; this has enabled it to become a business and trade hub of the Middle East. Due to its economic strength and opportunity and its affluent sales prospects, MNCs consider the UAE economy as a gateway to enter the Middle Eastern market.

In terms of CSR, the government of UAE has been encouraging business involvement in social responsibility and consumer awareness of their rights through various programs; such as activities for sustainable management focused on the importance of philanthropic initiatives to aid sustainable development [ 20 ]. Particularly, Dubai has championed emerging sustainability projects, specifically in construction and energy conservation.

Poverty reduction is a main concern for the government which has been tackled through food and housing projects and marriage funds. The Sheikh Zayed Housing Program and the Mohammed bin Rashid Housing Establishment are two examples of UAE-led philanthropic initiatives to aid citizen welfare, in addition to humanitarian initiatives that provide food for subsidized prices; in accordance to cultural attitudes, UAE also provides a marriage fund for low income citizens along with other programs such as healthcare and educational support [ 20 ].

Government funded CSR programs are also expanding internationally and deal with international development challenges; this is initiated by various programs such as Dubai Cares, which is the largest CSR initiative in the Middle East supporting social welfare in low-income countries in fields of education, health, water and sanitation, and school infrastructure [ 20 ]. The government also encourages employees to participate and volunteer in social projects through an initiative called ENGAGE [ 21 ].

Other UAE-funded national and international initiatives support SMEs by promoting CG and raising awareness on issues of transparency, responsibilities of board directors, auditing, and sustainability practices [ 20 , 21 ]. Lastly the Dubai Ethics Resource Centre specifically targets issues of CSR in the Gulf markets by planning forums and seminars in collaboration with business leaders and Gulf executives; their training sessions focus on improving knowledge of CSR targeted at professionals with the aim of enhancing CSR programs, strategies and infrastructures [ 21 ].

UAE governmental initiatives have yielded tangible results, evident through the increased awareness by consumers in the country, and specifically in Dubai and Abu Dhabi Emirates, where responsible business programs are concentrated [ 20 ]. Qatar is also a country rich in oil and gas with other booming sectors, with Qatar recently serving as the largest exporter of cement and steel [ 22 ]. It is a small country with the second highest migration rate and the first GDP per capita in the world [ 23 ].

The Qatari government has been according importance to accountability and transparency issues in the country, setting fertile ground for the disclosure of information, specifically related to socially responsible behavior [ 24 ]. While financial reporting has improved in the past decade, CSR disclosure is still a voluntary practice in Qatar, and not enforced by law. Companies lack a broad scope of CSR disclosure that mostly focuses on human resources; state regulations by the Qatari Government would help enhance CSR activities and set clear environmental disclosure standards in line with global sustainability trends [ 22 ].

Through initiating semi-governmental institutions, Qatar has participated in national and international philanthropy and community outreach programs [ 23 ]. In the country put forth the Qatar National Vision setting clear sustainable development goals with economic, social, and environmental targets.

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To further promote CSR activities and disclosure, the government should apply legal regulations for private sector involvement based on international and professional standards and criteria [ 14 , 26 ]. Oman is an emerging mixed market economy that also highly relies on the oil and gas sector with a salience of joint ventures with international corporations [ 27 ]. Private sector partners along with the civil society are expected to collaborate with the government to maintain national competitiveness and equality. The state has set local development targets through the national socio-economic development plan Vision , launched in ; these collaborations are also in line with national inclusion, where all sectors are expected to be involved in steps for development planning [ 27 ].

Kuwait has a large oil economy and therefore the recent oil production cuts have affected economic growth [ 10 ]. The government is attending to this issue through plans of economic diversification; a privatization plan was put in place to shift dependence from the oil and gas sector. Due to its legal context, it is up to the firm to participate in socially responsible activities such as human and labor rights. While some companies studied had assigned a board committee, others do not even have a selected board committee to look over governance issues [ 28 ]. There is no legal framework for social responsibility issues; however, some large sized companies exhibit some kind of participation in CSR practices [ 28 ].

This would be more organized and enhanced with well-structured legal regulations for accountability, CG, and social responsibility. GGC governments are playing an integral role in putting the basic infrastructure and groundwork for securing a path towards a sustainable future in the region.

Some GCC countries are trying to enhance and monitor CSR practices by diversifying national economy and supporting the private sector and civil societies, by launching philanthropic programs to aid sustainable development and reducing poverty and by establishing international networks to help other low-income countries. However, not all governments are as much involved, some are still lacking laws that enforce CSR practices and legal regulations for accountability. Normative and institutional pressures resulting from belief systems have a great impact on CSR practices in the GCC [ 17 ]; Islamic teachings salient in the region, view social responsibility as an obligation to business activity [ 18 ], namely through the Zakat obligatory tax to be given to the poor on an annual basis, and a general requirement by Islam to enhance social welfare and preserve environmental ecosystems [ 29 ].

However, these traditional efforts fall short of the global CSR standard, as they are usually private, fragmented, lack accountability and a clear strategy to maximize effectiveness of business philanthropic efforts [ 21 ].

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This section will discuss the religion-CSR logics and draw recommendations on the best course of action for sustaining traditions while moving towards sustainable development. Companies in Saudi Arabia have been following a religious tradition of Zakat which is charitable giving that requires companies and individuals to give an annual endowment of 2. This longstanding socially responsible tradition has transformed through business development to an obligatory institutional Zakat tax, commonly labeled by corporations as a CSR activity in recent years [ 29 ].

Therefore, CSR articulation has only come up in recent years in Saudi Arabia; initially there was a general traditional obligation on ethical business activities [ 14 ]. A study by CSR consultants in Saudi Arabia found that businesses are starting to leverage the benefits of CSR beyond merely charitable activities; focusing on a broader CSR scope involving employees, communities, and the environment [ 18 ]. Philanthropy has always been practiced in UAE through Zakat.

This has also been institutionalized and organizations are usually compliant with religious doctrines and practices. Due to the prevalent endowment behavior, organizations believe in their responsibilities towards society, apart from their shareholders [ 20 ]. The religious practices are not centralized and approached merely in an informal and unorganized manner. Unlike Saudi Arabia, a Zakat tax is not enforced or collected by the state.

Saudi Arabia Vision 2030: Growth, Diversification & Transformation of the Economy

However, some have argued against the effectiveness of a centralized Zakat collection practice; such system does little to better the living standards of the needy [ 20 ]. Zakat has a spiritual end whereas CSR ought to be targeted towards social equality and sustainable development.

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CSR also includes concepts of preservation of resources, sustainable practices, and involving stakeholders in business operations and strategies [ 21 ]. Qatar also has salient Religion-CSR Logics as it is an Islamic country with high social, cultural, and religious expectations of firms participating in philanthropy; this ultimately influenced the introduction of CSR in the professional realm and encouraged company participation to meet their social responsibility expectations [ 23 ].

Community involvement of businesses in Qatar has always been prevalent through donations such as to orphanages, elderly homes, and particularly sports [ 29 ]. Religious groups in Qatar also act as pressure groups on companies to get involved in the annual Zakat tradition [ 24 , 25 ]. These groups account to a significant portion of investors in the country and may choose to invest in companies that show interest in social development and participate with annual philanthropy [ 24 ].

Islamic values need to be present and emphasized by companies in Qatar to maintain legitimacy and survival; through enhanced communication with local groups and communities, and transparent disclosure of socially responsible behavior [ 25 ]. However, one study focused on social responsibility reporting of Islamic financial institutions based in Bahrain. There is evidence of voluntary philanthropic practices in Islamic financial institutions which signifies a commitment to social welfare issues in the country [ 31 ].

Similar to other countries in GCC, Oman is a Muslim nation characterized with philanthropic practices to low income groups, which has contributed to the assimilation of CSR concepts [ 27 ]. There is evidence of a merger in Oman of traditional philanthropic traditions with strategic CSR practices integrating economic, social and environmental challenges [ 27 ]. Islamic religion in the GCC countries views social responsibility as an obligation to business activity mainly through the Zakat tax.

However, the Zakat tax was practiced way before the CSR concept came to light and is considered as only one of the secondary pillars of CSR practices which is philanthropic. Social responsibility is present in the GCC in Islamic financial institutions as well.

Market-CSR interface creates various logics depending on the market dynamics of the specific context. International market integration greatly influences CSR logics and expressions. The local context has an even greater impact, for instance in case of monopolies or other peculiar ownership contexts. Moreover, the pursuit of market growth might produce operational negative externalities impacting society or the environment. Despite the fact that Saudi Arabia is an Islamic state following Islamic law and practices, a study found that companies pursue CSR beyond charitable and philanthropic activities [ 32 ].

Indeed economic, environmental, and social pillars are addressed through CSR, marking a qualitative shift in the country. However, companies through these practices are in pursuit of higher economic value with higher profits and long-term success [ 32 ]. Therefore, it seems that although a developmental approach is prevalent in some companies in Saudi Arabia; the guiding principle is in line with economic priorities.

Saudi Arabia has strong connections politically and economically to the west, and western market logics have manifested in the country [ 14 ]; It is emphasized by many authors that this particular Saudi CSR expression is inspired by western free-market economy influences, and plays a significant role in shaping business practices and economic priorities [ 14 , 32 ]. In this way, it has changed from being an economic activity to a political priority. Consequently, multiple governmental projects took place including generous philanthropic assistantship to low income groups in the Kingdom, as well as a housing development project where the government built half a million residential units for the needy [ 14 ].

This marks an evolution in CSR in the country moving away from western market logics and into new applications rooted in socio-economic rationales. Market logics in UAE are driven by high economic growth and international integration and competitiveness. This open market environment aiming for rapid economic growth may result in socially irresponsible behavior.

Indeed, due to opportunistic attitudes permeating the UAE, business practices have been characterized with poor labor rights, low customer safety standards, unequal welfare distribution, and environmentally damaging activities [ 15 ]. Governmental laws and structured regulations regarding business conduct exist but their implementation depends on institutional monitoring and enforcement capacity [ 15 ].

Although positive state-CSR logics prevail, there are several challenging factors that inhibit proper stakeholder engagement in the UAE market. Due to the high rate of economic development and international market integration, CSR in Qatar is growing exponentially as western-centric CSR is diffused to relevance in the local context [ 26 ]. Due to the high percentage of international firms in Qatar, CSR global standards and reporting are followed, especially in the energy sector [ 23 ].

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The energy sector in Qatar however does not follow the same type of CSR disclosure seen in western energy sectors. On another note, the recent governmental privatization program is attempting to enhance local investments. A study revealed that post the implementation of this program, a high association between shareholder percentages and CSR reporting prevailed [ 25 ].

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