The Role of Multinational Companies in the Middle East: the Case of Saudi Arabia

This study investigated whether known economic and international business theories available in the literature are meaningful enough to explain the nature, existence and role of multinational companies (MNCs) in the Middle East, particularly Saudi Arabia. Two sets of questionnaires were distributed in major cities of Saudi Arabia -- one set for 100 multinational managers and another for 280 multinational customers. 234 questionnaires were collected -- 45 from multinational managers and 189 from customers. This represents a total response rate of 62 percent, which is adequate for this study. The empirical results, supported with comprehensive secondary data, confirmed virtually all of the research hypotheses. The study found that joint ventures are the dominant form of multinational business in Saudi Arabia, both in manufacturing and service industries. The core roles of MNCs in the Saudi-foreign ventures are evident in the cross-border value-adding activities of marketing, trading, manufacturing, consulting, contracting, project management, insurance, hotel operation and banking. The results indicate that the business success of multinationals operating in Saudi Arabia is positively related to their local cultural awareness and responsiveness. Along this line, this study covers some vital elements of Islamic culture, which will help MNCs understand further the cultural needs, values and sensitivities of the Saudi people and Muslims in general.