Substituting Expats With Locals: TNCs and the Indigenization Policies of Saudi Arabia

24 Pages Posted: 11 Jun 2020

See all articles by Abdullah Alanezi

Abdullah Alanezi

National Institute of Public Administration

Tamer K. Darwish

Cheltenham & Gloucester College of Higher Education - Gloucestershire Business School

Satwinder Singh

University of Dubai - Dubai Business School

Anne MIROUX

Cornell University - Emerging Markets Institute

Date Written: April 30, 2020

Abstract

Owing to rising unemployment among Saudi nationals, the Kingdom of Saudi Arabia (KSA) has instituted Saudization, a localization policy that strives to induce the employment of more Saudi nationals in the private sector. A major gap in the literature is the lack of empirical investigation regarding the relationships between indigenization and the underlying principles of its process. This study seeks to fill this gap. The study assesses the success or otherwise of the Saudization initiative empirically and uncovers several features. It finds that TNCs that experience the external pressures to “localize” their workforce, and those that wish to enhance their social legitimacy, are more likely to comply with Saudization. Furthermore, TNCs do not believe that the process of localization provides them with economic gains. Legal coercion to adhere to the Saudization initiative turns out to be a highly significant instrument in making TNCs adhere to the localization process. The study also finds that neither age nor the size of the firm have an impact on the Saudization programme. Implications for theory and practice are drawn out.

Keywords: hierarchical regressions, indigenization, KSA (Kingdom of Saudi Arabia), transnational corporations, work force localization

Suggested Citation

Alanezi, Abdullah and Darwish, Tamer K. and Singh, Satwinder and MIROUX, Anne, Substituting Expats With Locals: TNCs and the Indigenization Policies of Saudi Arabia (April 30, 2020). Transnational Corporations Journal, Vol. 27, No. 1, 2020, Available at SSRN: https://ssrn.com/abstract=3624111

Abdullah Alanezi (Contact Author)

National Institute of Public Administration ( email )

P. O. Box 31990
Lusaka, Lusaka 10101
Zambia

Tamer K. Darwish

Cheltenham & Gloucester College of Higher Education - Gloucestershire Business School

PO Box 220
The Park Campus
Cheltenham, GL50 2QF
United Kingdom

Satwinder Singh

University of Dubai - Dubai Business School ( email )

United Arab Emirates

Anne MIROUX

Cornell University - Emerging Markets Institute ( email )

Sage Hall
Ithaca, NY 14853
United States

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