Nascent Entrepreneurs Challenges in Saudi Arabia

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Table of Contents

Abstract
Introduction
Literature Review
Research Methodology
References

Abstract

Saudi Arabia is a rich country, mainly due to its oil reserves and petroleum exports. Nevertheless, the developing economy has not met its potential due to the relatively weak SME’s growth. Although the government of KSA significantly improved the entrepreneurship ecosystem, the aspiring business people still face issues that significantly hinder the development of their ventures. The list of current obstacles following the literature review includes gender inequality found in regulations, specific culture and social norms, lack of funding, and government support. Government initiatives and support programs in line with the Vision 2030 are expected to improve business awareness in KSA. Expectance theory will guide the research for which the mixed methodology will be applied. This study is of high importance due to its focus on reasons that drive nascent entrepreneurs to embrace or neglect business activities.

Introduction

Saudi Arabia is known worldwide for its oil reserves and abundancy of money ready for investment. Nevertheless, there were always several factors regarding business regulations, religious rules, support mechanisms, and bureaucracy that significantly hindered entrepreneurship growth and realization of the Kindom’s economic potential. According to the 2017/18 Global Entrepreneurship Monitor (GEM) report, the local population is happy with recent entrepreneurial progress achieved by the government, and approximately 70% of respondents perceive running a business as a possible and desirable career option (Alsaidlani, 2018). The Doing Business report 2020 also highlighted significant progress due to a number of reforms that saw Saudi Arabia in the top 10 global business climate improvers (Sawy, 2019). However, chronic gender, social, cultural, and legal obstacles for nascent business people continue to exist. Although there are visible improvements, the Saudi Arabian government still needs to eliminate excessive paperwork during the registration stage, foster investment approval, and revise regulations to improve the ease of doing business.

Literature Review

An entrepreneurship issue in Saudi Arabia had intensified during the last decade when foreigners owned the majority of SMEs. Almuzel and Anderson (2020) present insufficient government regulations, local culture, economic problems, lack of individual knowledge and skills as the main challenges nascent entrepreneurs face in KSA. They also found that special education, individual support, and government support conducted in cooperation with the private sector are the major factors improving nascent entrepreneurship. Sabri and Thomas (2019) also regard macro-environmental elements such as networking, cultural background, and government regulation as essential mediating factors. These aspects of the business ecosystem can both encourage and discourage the Kingdom’s SME’s growth.

Moreover, motivational pull factors and psycho-attitudinal features of nascent entrepreneurs help to explain entrepreneurial emergence in KSA. The study conducted by Sabri and Thomas (2019) revealed that Saudi female entrepreneurs enjoy a slightly higher growth-oriented attitude in comparison to men. Thus, in order to achieve the goal of the Vision 2030, policymakers have to increase support to growth-oriented females in both ideation and mature business stages.

The gender discrimination that is still present in the Middle East due to the local culture specifications has kept women away from the business for a long time. Al-Kwifi et al. (2020), following assessment of elements affecting female entrepreneurship, conclude that knowledge about business incentives is the most important motivational factor. Despite the recent efforts to emancipate females, they still face challenges regarding business funding, male partners’ dominance in the decision-making process, low support from society, and unequal bureaucratic hurdles (Alsulami & Abutaha, 2018). Those barriers to the success of Saudi women can be eliminated with the help of government initiatives regarding financial support, business education, and support programs.

Theoretical Framework

This research would be based on the expectancy theory augmented by growth intentions. It is a theoretical framework used to explain human motivation to become a budding entrepreneur. According to Edelman et al. (2010), it includes expectancy, valence, and instrumentality. People who are interested in starting their own business tend to think about the expected efforts-outcomes relationship. Every action has its importance and leads to the outcome that can cause the consecutive one. In this regard, entrepreneurship is an occupational choice that emerges when an effort is expected to transform in a particular performance, and performance level will lead to outcome bringing the desired reward. The expectancy-value model of attitude explains how arising risk-takers pursue growth both for financial results and non-economic concerns.

Research Questions

The major goal of the research is to define the main factors that adversely affect the business ecosystem for the nascent Saudi entrepreneurs. Thus, the study would answer several questions related to its thesis. Do lack of business funding, individual knowledge, and excessive bureaucracy remain the main barriers for aspiring business people in the Kindom? How should existing government programs that support entrepreneurship growth and female involvement be altered to be successful?

Research Methodology

The mixed research method will be utilized to provide synergetic use of both qualitative and quantitative data. The concurrent approach will help to provide the most recent data and explain the results with integrated information. This study will initially present and evaluate factors affecting the establishment of SMEs raised in recent scholarly articles and other credible sources. Then these factors and issues would be assessed additionally and checked with the help of conceptual modeling to make a final and fresh guide on risks and opportunities for budding entrepreneurs.

Significance

It is the right time to compare the situation before and after these measures and spot current obstacles to nascent entrepreneurship. A preliminary literature review regarding factors affecting nascent entrepreneurs in KSA shows that the majority of existing literature addresses issues that influence an aspiring risk taker right after starting a business (Al-Kwifi et al., 2020). However, factors influencing the initial decision to start a venture is of high importance in order to improve the current business ecosystem.

References

Al-Kwifi, O. S., Tien Khoa, T., Ongsakul, V., & Ahmed, Z. U. (2020). Determinants of female entrepreneurship success across Saudi Arabia. Journal of Transnational Management, 25(1), 3-29. Web.

Almuzel, M., & Anderson, T. (2020, June). An assessment of entrepreneurial Ecosystem: The case of Saudi Arabia. In 2020 IEEE Technology & Engineering Management Conference (TEMSCON) (pp. 1-6). IEEE.

Alsaidlani, A. (2018). Report highlights entrepreneurial progress in Saudi Arabia. Arab News. Web.

Alsulami, H., & Abutaha, R. (2018). Saudi female entrepreneurs, situation and challenges. In 2018 Portland International Conference on Management of Engineering and Technology (PICMET) (pp. 1-6). IEEE.

Basaffar, A. A., Niehm, L. S., & Bosselman, R. (2018). Saudi Arabian women in entrepreneurship: Challenges, opportunities and potential. Journal of Developmental Entrepreneurship, 23(2), 1-20. Web.

Edelman, L. F., Brush, C. G., Manolova, T. S., & Greene, P. G. (2010). Start‐up motivations and growth intentions of minority nascent entrepreneurs. Journal of Small Business Management, 48(2), 174-196. Web.

Sabri, M. S., & Thomas, K. (2019). Psycho-attitudinal features: a study of female entrepreneurs in Saudi Arabia. International Journal of Gender and Entrepreneurship. 11(4), 459-480. Web.

Sawy, N. (2019). Saudi Arabia is the top improver in the World Bank’s Doing Business report as the UAE leads the region. The National. Web.

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