Women Entrepreneurs in Saudi Arabia

Introduction

Over the years, women have faced discrimination and other forms of challenges in society. This is especially so in the business world, where the market seems to be controlled by men alone. Many business fields are dominated by men, and women control only a small portion of the market when this happens. When women become business owners, they have to work extra hard to overcome discrimination and to prove their worth in a male-dominated field.

Women are a significant part of our society. This is especially so considering that they are the majority in the society, making up about fifty-one percent of the world’s population (Al-Ghazali and Sadi 2010). This being the case, it is important to note that empowering women in society will go a long way in helping everyone there.

It is noted that historically, women have been involved in a struggle in society to prove their worth, and also to take their rightful places in the society as far as all aspects of life are concerned. This struggle has been extended to the business world, where women are trying to prove that they are as good as men when it comes to managing business entities.

To this end, the women in developed countries seem to have made significant gains in the business world. It is estimated that women run and control about a third of all business enterprises in this society (Heathfield 2010). These businesses owned and managed by women are playing a very significant role in the economy of these countries, and their impact on the whole society in extension cannot be downplayed (Al-Ghazali and Sadi 2010).

Women entrepreneurship, as a result, has continued to attract the attention of scholars in society. There is interest in analyzing how this historically discriminated segment in the society is fairing on in a field that has been controlled by men for a very long time now. To this end, several studies have been conducted, addressing various attributes of this field. This ranges from the challenges that women face in their businesses, their rate of success, and other factors.

Businesswomen in Saudi Arabia have especially attracted a lot of attention from these scholars. This is given the fact that the women of this region are especially known for their subordinate role in society because men have traditionally dominated many spheres of life in this region for a very long time. They control business, family issues, politics, and such other important areas. It is traditionally known that the place for the Arabic woman is the home. Her life revolves around her family; her children, her husband and generally keeping the home habitable. As such, it attracts a lot of attention to see a woman spreading her wing far and wide, beyond the confines of the four walls of her house; to spread her wings to the business world.

It is estimated that women in Saudi Arabia account for about 45.5 percent of the total population (Abdullah 2010). This figure is however low when compared with the composition of women in the society in other regions such as the United States of America. According to Al-Ghazali and Sadi (2010), women make up about 50.9 percent of the total population in the United States of America.

Analysts in the demographic and population field have tried to explain this phenomenon, given the fact that females usually make up more than fifty percent of the population in most nations. One of the explanations is the fact that the girl child is discriminated against in the United Arab Emirates, a society that favors the boy child. This being the case, girls experience a lot of challenges as they grow up, given the negligence that they have to persevere in some quarters. For example, it has been reported that in some rural communities in this country, infanticide involving the girl child is reportedly rampant (Heathfield 2010). Those girls who survive have to undergo other challenges such as high mortality rates, further reducing their population.

Another explanation has to do with the fact that the United Arab Emirates has experienced a high influx rate of foreigners. For example, the economic boom in Dubai and other emirates have attracted the attention of other people from other countries (Al-Ghazali and Sadi 2010). People flock to this country either to look for jobs or to invest. It is estimated that about 5.6 million foreigners currently live in Saudi Arabia. The majority of them are male job seekers and investors. Their presence here has further affected the population of females in this country.

It is also noted that women in this country make up a tiny percentage of the working population (Hamdan 2005). This is as a result of the factors given above in addition to others. For example, according to the Abu Dhabi Business Women Council [herein referred to as ABC] (2007), women make up a measly 15 percent of the working population in this region.

In Saudi Arabia, the number of businesswomen is approximated at around 23,000 women (Al-Ghazali and Sadi 2010). This is a small figure compared with the number of men who operate businesses in this country. It is also estimated that these women are worth about 62 billion, both in bank accounts and other assets such as buildings and land (Al-Ghazali and Sadi 2010).

The percentage of women in owning businesses in Saudi Arabia may appear tiny, but according to Forbes magazine, the few are making a great impact within business circles. For example, this magazine reports that 10 Muslim business executives from the Middle East made an appearance in 2008’s list of 100 most powerful businesses in the world (Al-Ghazali and Sadi 2010).

In the last five years, women in the whole world have made significant progress in the business world. However, progress is distinct in Saudi Arabia. This is given the fact that, as compared with other women entrepreneurs in the world, the women in Saudi Arabia display some distinct traits that make them more competitive in the global market. For example, it is said that they are highly educated because 58 percent of university graduates in this country are women (World Bank 2009). Some of these women are the ones that end up in the business world, meaning that the average education level of a Saudi businesswoman is likely to be high.

Another characteristic of these women is the fact that the majority of them are young. As such, they have brought a youthful and fresh touch to the business world. There are other factors such as globalization that have empowered the Saudi woman by her exposing her to the outside world. All of these factors mean that the Saudi woman is motivated to start and manage their businesses, a thing that was hitherto not so common in this country.

This dissertation is going to look at the women entrepreneurs in this country. The focus will be on small and medium enterprises that are owned by women in this country. An analysis of the range of products and services that are produced by these businesses, as well as the size of the business, will be carried out. The aim will be to find out the factors that motivate women to set up their businesses. Also, the researcher will look at some of the challenges that face these women as they try to make efforts to succeed in the business world, and how these challenges are overcome.

Background Information

According to statistics from the World Bank (2009), the Middle East has experienced remarkable economic growth over the past few years. This has been brought about mainly by the increase in oil prices in the global market. This has in turn led to growth in the number of jobs available in the market. According to the World Bank (2009), in a span of five years (from the year 200 to the year 2005), the number of employment rates peaked at about 4.5 percent annually. This means that a total of about 3 million jobs were created each year, far much outgrowing the region’s annual labor force growth of about 2.8 million (world bank 2009). Within the same period, the rate of unemployment in this region also dropped about 4 percentage points. This is from 14.3 percent in the year 2000 to about 10.8 percent by the end of the year 2005.

The private sector has become a key factor in these developments in the Middle East. It is estimated that this sector of the economy has contributed significantly to job growth, accounting for about 20 percent of all the jobs created in the Middle East.

However, analysts such as Hamdan (2005) and Abdullah (2010) bemoan the kinds of jobs that have been created in the Middle East economy in the recent past. They are of the view that it is encouraging to learn that the economy is vibrant, evidenced by the rate of job creation. However, they are of the view that an analysis of the forms that are made available paints a drab picture for the country’s future. This is given the fact that most of the jobs are in the construction industry and public works (Read 2006).

To this end, it is noted that the countries in this region, including Saudi Arabia, have not yet made the prerequisite shift in the job market. For example, countries such as Ireland made the shift way back in the 1990s. During this time, it was noted that the economies in these countries made a shift such that the sectors that recorded the highest growth also accounted for the highest part in the employment sector. This led to rapid growth and a decline in unemployment, which in effect led to a general improvement in the country’s standard of living (Abdullah 2010).

The concern here is that jobs in the construction and public works sector are not sustainable. For example, jobs in the construction sector last as long as the construction boom lasts. The jobs from this sector are more or less cyclical, meaning that they are unable to provide stable or high-quality employment in the future. Those who are working in the construction and public works sector, according to the world bank (2009), are less likely to be able to enter into employment in other sectors when the construction boom comes to an end. They are likely to revert to the unemployed class, in effect widening the unemployment rates in the country.

Even though employment is generally high in Saudi Arabia, the case is different when one considers the women who are in employment in this country. This is given the fact that they are unable to work in the construction and public works industry, where most of the employment opportunities are to be found. This means that as unemployment among the male population is declining, that among the female population is on the rise (ABC 2007).

Unemployment among females in Saudi Arabia is acute especially among those women who are educated. This significance of this can be better appreciated when one takes into consideration the fact that women make up a large portion of those graduating from universities, as compared to men. Women who are educated are thus not willing to join the construction industry, in effect increasing the number of unemployed women in the society.

It is against this backdrop that attention has shifted to the women entrepreneur in Saudi Arabia and other Muslim nations. This is noting the fact that starting businesses by these women is a positive step towards reducing the unemployment rates among the womenfolk. Apart from helping the nation address the issue of female unemployment, women entrepreneurship can help in addressing other challenges in the economy. This is like creating a sustainable source of income, given that women entrepreneurs tend to deviate from the normal and conventional fields of investing, such as construction and oil extraction and processing industries.

This dissertation is an effort by the author to try and analyze the situation in this country as far as this phenomenon of women entrepreneurship is concerned.

Research Questions

This research has one major research question and several other specific questions. The researcher will address the major research question by effectively answering the specific questions (Atkinson 2003). The following are the research questions:

Major Research Question

The major research question is:

What are the real factors that motivate women to set their businesses in Saudi Arabia?

Minor Research Questions

The following are specific or minor research questions:

1. What are some of the factors that motivate women to set up their businesses in Saudi Arabia?
2. What are some of the challenges that women entrepreneurs in this country face?
3. How are these challenges related to their success in entrepreneurship?
4. How can these challenges be addressed?
5. What is the significance of women entrepreneurship in the Saudi economy?
6. What is the future of women entrepreneurship in Saudi Arabia?

Research Objectives

The objectives of any research are the goals and aim that the researcher aims to achieve by carrying out the study. They are the aims that will be met by the results of the study (Zharkov 2010). The research objectives are related to the research questions.

This study has one major objective and several specific ones. Just like in the case of research questions, the major objective is successfully attained by addressing the various specific objectives adequately.

Major Objective

The following is the major objective of this study:

To analyze the factors that motivate women in Saudi Arabia to set up their businesses.

Specific Objectives

The following are the specific objectives for this study:

1. To identify and analyze the factors that motivate women to start their businesses in Saudi Arabia
2. To identify and analyze the differences between working in a public sector and working in a private sector in Saudi Arabia
3. To illustrate the types of jobs that are available in Saudi Arabia’s private sector
4. To analyze the nature of women entrepreneurship in Saudi Arabia
5. To identify the role of women entrepreneurs owning small businesses in the economy of Saudi Arabia
6. To identify and analyze the challenges and obstacles that women entrepreneurs in Saudi Arabia encounter
7. To compare small businesses in Saudi Arabia with those in the united kingdom using case studies
8. To highlight the success of women entrepreneurs in Saudi Arabia and other countries

Significance of the Study

The following are some of the contributions that this study will make in this field:

1. The findings of this study will be significant to policymakers in Saudi Arabia and the United Arab Emirates in general in making policies that touch on empowering the woman entrepreneur in the country
2. The findings will also be significant to women entrepreneurs as they will identify some of the challenges that face them and hence come up with strategies that can be used to address them
3. The findings will be helpful to women who are aspiring to start businesses in Saudi Arabia and other countries. They will be aware of the challenges that they are likely to face and how to overcome them
4. The findings of this study can be used by policymakers in coming up with strategies to use in overcoming challenges in the economy in general. This is for example on how to reduce unemployment among females in the country by encouraging them to start small businesses

Research Methodology

The researcher will use both primary and secondary sources of data. Primary data will be collected by the use of interviews and questionnaires administered to the participants. The questionnaires and the interviews will be designed in such a way that they address the research question identified earlier, as well as meeting the research objectives.

The research will draw participants from the public and the private sectors. The female employees in Saudi Arabia’s ministry of health will be used for the public sector respondents. This is together with the Public Administration Institute. As far as the private sector respondents are concerned, the researcher will use female employees from Al Ahli Commercial Bank as the respondents.

The interview will be conducted with a minimum of two Saudi businesswomen who have retired from the public sector. Other interviews will be conducted with other two or three Saudi businesswomen who have not had experience as employees in the public sector.

Secondary data will be gathered throughout the phases of the study. This will be obtained from the internet, books, journals, magazines, and newspaper articles accessed from the school’s library or elsewhere.

Scope and Limitations of the Study

The following are some of the scope and limitations of this study:

1. There is the issue of honesty and thoroughness in answering the questions in the questionnaires and during the interviews. As such, the researcher was aware of the fact that the responses may not reflect the real situation on the ground
2. Another issue is the difficulty of finding the right participants for the interviews to be conducted
3. The study limited itself to women entrepreneurs in Saudi Arabia and the United Kingdom. This is even though there are women entrepreneurs in other countries in the Muslim world who would have qualified for the research
4. The study was also limited to women entrepreneurs. Businesses owned by men or which are publicly owned were not considered for the study
5. The study was limited to small businesses only. Large businesses, even in cases where they were owned by women, were not considered for the study

Assumptions made in the Study

Since the researcher could not control all the variables in the study, some of them were held constant. It was assumed that these variables will not change during the study, and if they did change, the change will not be reflected in the findings of the study. These are the assumptions that were made in the study:

1. It was assumed that the experiences of women entrepreneurs in Saudi Arabia were similar to that of women entrepreneurs in other Muslim nations, and as such, the findings of the study could be generalized to these other nations
2. It was also assumed the experiences of women entrepreneurs in Saudi Arabia is different from those of men in the country as far as the challenges and motivation is concerned
3. It was also assumed that the experiences of women entrepreneurs in Saudi Arabia, and an extension in the Muslim world, is quite different from the experiences of women entrepreneurs in other countries as far as the challenges and motivation factors are concerned

Context of the Study

Several factors motivated the researcher to conduct this study. These are what Elbaz (2009) refers to as the context of the study, and they are both professional and personal.

Professional Context

The researcher is a Masters’s student at the University of Hertfordshire. Being a business management student, the researcher has come across a lot of literature touching on women entrepreneurship. From the literature, the researcher realized that women entrepreneurs in the Muslim world face unique challenges in their field. At the same time, the researcher realized that the literature available on this topic was very limited, both qualitatively and quantitatively, as compared to the literature on women entrepreneurs in other nations. This created an interest in the researcher to conduct a study to have an insight into this field and to add to the amount of knowledge in the field.

Personal Context

The researcher has in the past worked with women in Saudi Arabia’s ministry of health. In their work here, they noted that the women faced unique challenges as compared to their male colleagues. The researcher wanted to know whether these challenges extend to the business world.

Chapter Summary

This chapter introduced the reader to the study, and they were prepared for what to expect for the rest of the study. Several aspects of the study were highlighted in this chapter. Background information was provided to contextualize and locate the study within the wider field of entrepreneurship. The researcher also provided the research questions, the research objectives, limitations, and scope of the study, the assumptions of the study among other key highlights.

The next chapter is going to review relevant literature that exists in this field. The review will aim to identify knowledge lacunas that exist, lacunas that the researcher will try to bridge. The review will also locate the study within the larger field of women entrepreneurship in the Muslim world.

Literature Review

Small and Medium Enterprises (SMEs)

The term small and medium enterprises (SMEs) have been used variously in different economies around the world. For example in Germany and other European nations, it has always been taken that a company with less than 250 employees could qualify as an SME (Heathfield 2010). On the other hand, the United States of America sets the thresholds at less than 500 employees.

Several efforts have been made to standardize this definition. The European Commission has made efforts to this end, setting the limit for a small and medium enterprise to be at 250 employees or less. Other criteria are provided by this commission in defining an SME. The table below summarises this:

Table _: Definition of an SME (European Commission standards). Source: World Bank 2009.

Factors Affecting the Success of Small and Medium Enterprises

Several factors affect the success of SMEs in various economies around the world. Some of them are as listed below:

Government Policies

The government plays a critical role in determining the success or lack of it thereof of SME. This has to do with policies such as the regulations to access credit, the regulation of the currency, and such others.

In countries where it is easy to access credit, the SMEs tend to succeed than in those where credit access is limited. They also tend to succeed where the regulations such as those needed to set up a business are supportive. The SME sector will be vibrant in countries where the tax regime is friendly, and where the regulations are not discriminatory.

State of the Economy

As much as SMEs affect the economy of a nation, they are also affected by the same. For example, the sector tends to thrive in times of economic stability and boom. SMEs are the first to be affected by economic downfalls such as the recent credit crunch. This is given the fact that they may not have a strong capital base to cushion them from the effects of the credit crunch.

Social Factors

There is also the issue of social factors such as belief systems and values in society. According to the World Bank (2009), these enterprises seem to succeed in countries where people have the ethic of saving. The savings are then used to invest in businesses. However, it also noted that some level of spending among the populace is needed to make this model of SME work. This is given the fact that SMEs will rely on the spending power of the consumers for them to thrive.

Methodology

Introduction

In chapter two, the researcher provided the reader with a review of relevant literature within the field of women entrepreneurship, with a special focus on women entrepreneurship in the Muslim world. In this chapter, the reader will be taken through the steps that were followed in conducting the study. A description of the tools of data collection used, and how they were administered, will be provided. This is together with a highlight on the participants, the challenges faced in the process of collecting data among others.

Sampling

Sampling Technique

A combination of several sampling techniques was used. Purposive sampling, a non-random sampling technique, was used to select the institutions within which the study will be conducted. Both the Saudi Arabian ministry of health and the Al Ahli commercial bank was selected because the researcher has had past experiences with them. Whereas this was likely to increase the bias of the findings, the selection gave the researcher control over the treatment of the participants. The same applied to those respondents that were drawn from the Public Administration Institute.

After the institutions were identified, the researcher carried out stratified sampling, where the workers in the institutions were stratified into males and females. The researcher selected females. Random sampling was conducted on the female employees to come up with the number required for the study. It was important to use random sampling here to create the representativeness of the sample.

Purposive sampling was also used to select women who formed the respondents for the interview. The researcher purposively selected those women who own businesses, and who have retired from the public sector.

Sample Size and Description

A total of twenty-five respondents were used for the study (N=25). This included 20 respondents that a questionnaire was administered to (Nq=20) and 5 key informants that were interviewed (Ni=5). The researcher felt that 25 was a manageable size, and that is why they settled for this number.

The twenty respondents for the questionnaires were sampled from the three institutions. These were distributed over the institutions as follows:

1. Ministry of health- 8 respondents (n=8)
2. Public administration institute – 6 respondents (n=6)
3. Al Ahli commercial bank – 6 respondents (n=6)

Total (Nq) = 20

The five key informants included three women from Saudi Arabia, one woman from Malaysia, and one woman from the United Kingdom.

Collection of Data

As earlier indicated, the researcher collected both qualitative and quantitative data, as well as primary and secondary data.

Collection of Primary Data

Primary data was collected using two techniques. The first was a structured questionnaire that was administered to 20 female employees both from the private and public sectors. The questionnaires were completed individually by the respondents, without the help of the researcher. This provided quantitative data for the study.

The second tool used to collect primary data was an interview. Individual interviews were conducted on the five women identified. This provided the researcher with qualitative data.

Collection of Secondary Data

Secondary data was collected from internet resources, books, newspapers, and magazines. The importance of secondary data was to provide the researcher with a different perspective on the subject of women entrepreneurship. The data was important in providing literature for the study.

Tools for Data Collection

The Questionnaire and the Interview

As already stated, the researcher used two tools in collecting data for the study. These were interviews and questionnaires. The questionnaires were structured and closed-ended, meaning that the participants were required to provide specific information. There was no opportunity for the participants to provide their opinions. This was used to enable the researcher to control the responses collected, and to ensure that irrelevant and out of context responses were kept to the minimum. However, one limitation with this questionnaire was the fact that it narrowed the scope of the data collected. The researcher was unable to receive different perspectives on the subject from the respondents.

The interview was also structured, meaning that the respondents could not provide the researcher with information that was not solicited for. The limitations and strengths of this method are similar to that of the questionnaires as stated above.

The questionnaire that was used and the interview schedule are provided in the appendix section of this paper.

Administering the Questionnaire

The questionnaire was either mailed to the respondents or delivered personally. Personal delivery was done for the available respondents, those that the researcher could access. The mailing was done for those that the researcher could not reach personally. A total of 12 questionnaires were delivered personally while 8 were mailed.

The respondents were given ten days, within which they were supposed to complete the questionnaires and return them to the researcher. The questionnaires were self-administered, and this gave the respondents the time and space they needed to reflect on the answers.

Administering the Interviews

The interviews were conducted both over the phone and personally. Personal interviews were conducted on those respondents that the researcher could access, while a phone interview was conducted on those the researcher could not reach personally. Three face to face interviews were conducted, while two interviews were conducted on the phone.

Ethical Considerations

Every study that involves humans as the subjects have to take into consideration ethical issues. The current study was no different. The principles of informed and free consent were adhered to. The participants were informed about the purpose of the study and the intentions of the researcher. This was done in the introduction part of the questionnaire, while it was communicated verbally during the interviews. The participants were informed that they were under no obligation to be part of the study, and they could withdraw at any point in the study with no repercussions. The researcher also sought the permission of the various institutions before conducting a study on their staff. Permission was also sought from the university’s ethical committee.

Challenges and Limitations of the Study Design

The methodology used in this study had several limitations.

1. There was the issue of ethics, given the fact that human subjects were involved. This was addressed by adhering to the principles of free and informed consent, and seeking the permission of the school administration and the institutions
2. There was also the issue of honesty on the part of the respondents. This was taken care of by ensuring that the questionnaires and interviews were structured, meaning that the respondents were not allowed to provide irrelevant information
3. Another issue had to do with limited resources, both financially and in time. These were addressed by selecting a manageable size of respondents

Data Analysis and Presentation

The data collected were analyzed using simple statistical operations such as correlation analysis, percentages, and coefficients. The data was presented using tables, charts, and such other forms of presentation.

Chapter Summary

This chapter provided the reader with a highlight of the steps that were followed in collecting data.

References

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Abu Dhabi Businesswomen Council 2007. Women Business Owners in the United Arab Emirates. The Centre of Arab Women Training and Research and the International Finance Corporation, 2007, 3-41.

Al-Ghazali, M., and Sadi, M 2010. Doing Business with Impudence: A Focus on Women Entrepreneurship in Saudi Arabia. African Journal of Business management, 4(1), pp. 01-011.

Atkinson, T P 2003. Social Research Methods. New York: McGraw-Hill.

Elbaz, E N 2009. Conducting Social Research. New York: Free Press.

Hamdan, Y 2005. Women and Education in Saudi Arabia: Challenges and Achievements. Web.

Heathfield, S 2010. Women and Work: Then, Now, and Predicting the Future for Women in the Workplace. Women in Business.

Read, H E 2006. Profile of a Successful Malaysian Entrepreneur. MS READ, December 5, 2006, 1-3.

World Bank 2009. The Environment for Women’s Entrepreneurship in the Middle East and North Africa Region. Web.

Zharkov, U 2010. Qualitative Research Methods. London: London University Press.