Managing in uncertain times – a critical juncture for research in the MENA region

Citation

(2013), "Managing in uncertain times – a critical juncture for research in the MENA region", Journal of Strategy and Management, Vol. 6 No. 2. https://doi.org/10.1108/jsma.2013.35806baa.001

Managing in uncertain times – a critical juncture for research in the MENA region

Managing in uncertain times – a critical juncture for research in the MENA region

Article Type: Guest editorial From: Journal of Strategy and Management, Volume 6, Issue 2.

Introduction

We are delighted to be writing this editorial of a special issue on “Managing in uncertain times – a critical juncture for research in the MENA region.” The chosen theme is in conjunction with the annual conference of the Academy of International Business (hereafter AIB) Middle East and north Africa (hereafter MENA) in 2012 which provided a regional focus for the journal. The nature of management studies is subject to continual questioning and evaluation by scholars (Astley, 1985; Clegg and Hardy, 1996; Whitley, 2003; Reed, 2006; Tsui, 2009). The theme “Managing in uncertain times” reflects the challenges and opportunities businesses have in disruptive global market and should provide a broad scope for a variety of research that would contribute to the increasingly important knowledge on strategy and management in the MENA context. Underestimating uncertainty can lead to strategies that neither defend against the threats nor take advantage of the opportunities that higher levels of uncertainty may provide. The Journal of Strategy and Management plays a vital role in the area of strategy and, more broadly, in the scholarly efforts of all management researchers seeking to add practical value, particularly those in the MENA region, of which, the context of this special issue is based upon. The relevance of indigenous knowledge or, more precisely, whether indigenous research and theorizing can provide novel insights into an international theory of management as well as local management (Rodrigues et al., 2011; Alon et al., 2011; Tsang, 2009) may be on the verge of an important transformation.

Background on the special issue

Academic research plays a key role for the development of economies and societies in emerging countries (Tsui, 2007, 2009). To promote academic research in emerging countries, NGOs, governments, academics, corporate actors and philanthropists make huge efforts to build thriving research ecosystems. While some emerging countries such as China and India have already made significant progress, others such as the MENA region are still lagging behind (Robertson et al., 2001). To clarify what constitutes the MENA region – a widely used but confusing definition, without duplicating previous attempt to pin down its boundaries as scholars have done (e.g. Zahra, 2011; Forstenlechner, 2010; Adelson, 1995), we have used membership countries considered under the AIB-MENA Chapter as a guideline[1].

The dominant worldwide trend toward globalization has benefited many countries both economically and socially. However, globalization has impacted different groups differently. Since late 2008, the financial crisis began to roll across the world, the combined effects of the global slowdown and low oil prices have evidently affected the economies of the MENA region. Having recovered markedly in 2010, the economic outlook for MENA is still highly uncertain given the ongoing political turbulence that is sweeping the region. With the highest youth unemployment rates in the world as a result of institutional rigidities, failing employability from the education sector and a demographic “youth bulge” that has increased supply pressures on the education systems, labor markets and housing markets of the region. At this critical juncture, people across the region have been at the forefront of the social unrest taking place over the past two years. The recent civil unrests and mass protests that swept through several Arab states (hence the phrase “Arab Spring”) have revealed certain fundamental weaknesses in the structures, ability and capacity of regional organizations. As the world unprecedentedly interconnected through a complex web of product, capital, labor and knowledge flows, the critical question is to identify what role the MENA region play in the global community and the level of integration and development of its member countries.

As MENA moves beyond the concurrent turbulences, organizations within the MENA region are aiming to transform themselves into competitive and responsible participants in the global marketplace. This signals a shift of developmental focus for both the governments and the organizations to prioritize innovation by harnessing human capital as the true driver for sustainable growth and change. The critical task every individual and every organization faces is, however, to prepare for the unknown. During these challenging and uncertain times, the contributions of management and strategy research in business and organizations are paramount. The academic world is not isolated from the world of practice. As MENA struggles with the new realities of this unprecedented transitions, management researchers and practitioners must pay attention to the role that academic theories may play in its evolvement and developments. To address these important challenges, there is a need to connect researchers from emerging markets (MENA countries in particular), to both become part of the global “village” of researchers and work toward developing a research community of researchers working in these geographically diverse regions.

It appears thus far that original theorizing on MENA-based business and management practices is still in a primitive stage, the big questions therefore facing the scholarly community are: “Do we understand the nature and the impact of these processes and do we stand ready to help companies and managers to not only survive but also thrive in a post-crisis world? How can we as business and management scholars contribute to resolving the current tensions by offering ideas or even solutions for minimizing the risks of uncertainty while leveraging its benefits?” To increase the robustness of regional research output from MENA to global standards, as well as facilitate scholars to engage in intellectual dialogues and discourse among a common interest. Using the metaphor of writing for publication of “joining a scholarly conversation” (Huff, 1999), it is necessary to connect local with the global research community. It is our expectation and aspiration that this special issue through Journal of Strategy and Management in collaboration with the AIB-MENA Chapter will offer readers a source of knowledge and discussion about management and strategy in the MENA context.

This special issue contains five original papers, all of which have been specifically written for the purpose of this special issue through an open call for submissions at the 2012 AIB-MENA annual conference. Overall, we received 15 submissions, of which five were accepted after a double-blind peer-review process, the papers in this issue bear witness to enrich and enliven scholarly discourse on variety of topics still under-researched in this part of the world.

In this special issue

One of MENA countries’ top priorities in the coming decade is job creation for a youthful population whose size and energy could either catapult economic activity at home or be lost to better opportunities abroad. Capitalizing on this potential will be no small task and will demand brisk job creation. According to the World Economic Forum, the region needs to create 75 million jobs by 2020 – a jump of more than 40 percent over the number of jobs in 2011 – just to keep employment close to current levels. The key to accelerating job creation will be fostering a business environment in which entrepreneurs can easily start new companies, spread innovation and spur economic activity in general. Abubaka's paper on “technology in impoverished markets and new business formation rates: spatial analysis of developing countries” draws from the bottom of the pyramid (BOP) concept (Prahalad and Hammond, 2005) and market spillover theory (Jaffe, 2005), to develop a framework for examining whether or not, technology development at the BOP significantly influences rates of new business creation in developing market. While it has been postulated in the past that technology market development at BOP will create millions of new entrepreneurs in developing countries as the BOP is the largest untapped market, to date, there is hardly any macro-level cross-country study investigating the extent to which such market development at the BOP influences the rate of new business formation in developing countries. The results suggest that the established link between ICT and economic growth in developing countries may be occurring through “new business formation” acting as a mediator between the two.

Mobility and diversity of human capital are often key ingredients to enhanced global trade and internationalization. Along with engaging the diaspora and improving local research institutions and systems, foreign direct investment (FDI) can transmit new ideas that stimulate growth, encourage local entrepreneurs to create companies, generate new jobs and improve quality of life. Multinational companies (MNCs) transfer innovative technologies, contemporary management thinking and practices and modern marketing skills. Past research in understanding MNCs’ decisions regarding entry modes, operation modes and location choices have typically been studied through empirical lens or questionnaire-based surveys. A range of quantitative studies have considered the determinants of FDI flows. Such studies have been carried out for a number of regions, including emerging markets (e.g. Huang et al., 2011; Bevan and Estrin, 2002) and the Middle East region in particular (Chan and Gemayel, 2004; Mina, 2007). However, qualitative research on the topic of which factors companies take into account when making location, entry mode and operation mode decisions are rare. Rogmans’ paper on “Location and operation mode decision making in the Middle East: a case study approach” employed a qualitative methodology which complements the existing quantitative research by testing the decision-making criteria in the company level decision-making process in the context of FDI. This paper develops tests and restates a set of propositions on how companies make location and operation mode decision making, based on a series of interviews with decision makers from MNCs in the Middle East.

Indigenous research disconnected from the scholarly literature in the field may have value in informing local management or policy makers. Especially research published in local languages is often context specific, but without systematically analyzing the contextual influences. This inhibits communication with scholars elsewhere. Such work does not contribute to global management knowledge, which weakens its potential impact. At the same time, implications derived for local audiences may fall short of what could have been achieved if scholars had made better use of the available global knowledge, both to explain causal relationships that are similar, and to point out puzzles that cannot be explained by existing theories. One phenomenon that has originally been described as context specific to the Middle East, but now discovered to be of broader relevance and implications is the practice of Islamic finance. Islamic finance is one of the fastest growing segments of the global financial industry. In some countries, it has become systemically important and, in many others, it is too big to be ignored. It is estimated that the size of the Islamic banking industry at the global level was close to $820 billion at end-2008 (IMF). The largest Islamic banks are located in the countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE).

While Islamic banks play roles similar to conventional banks, fundamental differences exist between the two models. The main difference between Islamic and conventional banks is that the former operate in accordance with the rules of Shariah, the legal code of Islam. The central concept in Islamic banking and finance is justice, which is achieved mainly through the sharing of risk. Stakeholders are supposed to share profits and losses, and charging interest is prohibited. To examine and illustrate how a relatively young Islamic financial institution has successfully gone international, Mostafa and Uddin's paper on “Internationalization of an Islamic investment bank: opportunities and challenges of Arcapita” demonstrate how Arcapita seem to have capitalized on this apparently untapped niche market in the international arena through its unique policies and strategies. The case illustrates how the company being the first of its kind in conforming to the Shari’a principles (Islamic law) fully in its business, Arcapita achieved spectacular success to-date.

Exceptional economic growth in the MENA region over the past decade has not coincided with equally buoyant labor and human resource development, raising obvious concerns for sustainable and balanced growth. The rising unemployment rates among nationals and the need to increase the human capital contribution of the national workforce has encouraged many MENA country governments to embark on labor nationalization policies. These policies were designed to increase the labor force participation of nationals, increase the proportion of national workers across different sectors, enhance their productivity and ultimately replace expatriate workers with national workers. One particular obstacle faced by the fast-growing economies of the Gulf countries is that the educational sector is unable to keep up with the pace of development and demand for skills. In other words, there is a shortage of educational institutions – schools, technical and vocational centers – that are able to provide a sufficient supply of human capital to meet market demand.

The K-12 education and business sectors notoriously blame each other for many of society's ills. But what happens when they join forces? Barza's paper on “School-business partnership – the case of UAE” discusses the potential and rationale for entering into educational partnerships with businesses from the point of view of both stakeholders. Understanding the process by which schools and business entities collaborate with the goal of improving student achievement is important to ensure success and anticipate barriers. Pitfalls and keys to success are outlined, together with current partnerships in the UAE are described. Paper also provided recommendations for school and business leaders interested in forming partnerships based on lessons learned from the research.

As research and development functions and business activities are increasingly global, and as international collaboration and competition are intensifying, research on creativity in the workplace has practical, as well as theoretical significance. Creativity can involve products, services, organizational processes and work methods – in any functional area, at any organizational level (Zhou and Shalley, 2010; Amabile and Conti, 1999; Oldham and Cummings, 1996; Woodman et al., 1993). It is essential for organizations’ survival and growth. Middle East countries lack systems that foster creative discovery and innovation, lagging well behind other parts of the world. In fact, recent data suggest that most of MENA countries have experienced declines in their innovation systems relative to prior levels in 1995. These declines are alarming given the fast and rising competition on scientific discovery, invention and innovation around the globe (United Nations Development Programme, 2009).

Baker and Sonnenburg's article titled “DASH co-creativity as a luminal experience” study how organizations are transformative entities creating innovations. Precisely, transformation needs co-creativity as most transformative acts in organizations are based on interactive situations in which one person rarely acts alone. However, until now, it is not clear theoretically and operationally what co-creativity is and how an organization could be better structured to foster co-creativity. Even if co-creativity is a complex phenomenon with a lot of uncertainties, it is valid to say that co-creativity is manageable up to a certain degree. This research led by Baker and Sonnenburg offers a renewed understanding for creativity and co-creativity in organizations by examine group composition and processes as key parameters to affect creativity, through which, authors continue to refine DASH (despair-air-share) as a concept to explore and enhance co-creativity.

Conclusion

The papers in this special issue in collaboration with the AIB-MENA Chapter annual conference address important research questions using varied theories and methods, an eclectic mix that perhaps represent the type of scholarship that Journal of Strategy and Management promotes – rigorous and relevant work with potential to embark true impact on business and management practices. While the topics covered in this special issue provide an impressive breadth of research foci, there is still much work ahead for academics and practitioners alike, both within or outside of MENA, to shed light on many of the pressing issues in the region.

Absent from this special issue are two types of studies: longitudinal studies and inductive theory building studies. Given the ongoing dynamic changes in the MENA region, longitudinal studies that track the changes in the environment and observe their effect on the firms provides an ideal quasi-experimental research laboratory (Zahra, 2011; Shenkar and von Glinow, 1994). MENA-based scholars could observe and analyze natural evolutions as well as document the results of deliberate interventions by the state, the regional institutions or by management within the firm. On the other hand, there is a need for grounded research to generate new insight and develop new theories of management taking an inductive approach that may not otherwise be discovered by applying or extending existing constructs or models. We would encourage scholars to design and pursue studies that are totally devoid of the western lens by going native or “indigenous” (Meyer, 2006). However, to ensure that such indigenous studies contribute to global knowledge, we urge such native scholars to identify the international scholarly conversation in which they would like to participate.

Victor Z. Huang and Melodena BalakrishnanGuest Editors

Note

The countries under AIB-MENA are (in alphabetical order): Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, the UAE and Yemen.