The interface of networking and 'wasta' in an Arabic context

Sefiani, Yassine and Davies, Barry and Bown, Robin and Kite, Neilson (2016): The interface of networking and 'wasta' in an Arabic context.

Abstract

ABSTRACT Purpose - The aim of this study is to uncover particular and significant methods of pursuing business connections, in the small manufacturing businesses of Tangier.

Prior Work - The significance of networking and its impact on the performance of SMEs was revealed in a number of studies. There have been significant studies on the structural, relational, and cognitive dimensions of social capital in value creation. It can be noted that there are potentially significant differences in the concept of networking particularly those that are influenced by Arabic culture.

Approach - A two-stage design, which incorporated both quantitative and qualitative approaches, was employed in this study. Approaches were employed in succession with the findings from the quantitative phase informing the qualitative phase. Initially, a paper and online survey questionnaire was administered to a population of 365 industrial SMEs to gain some insights on the perceptions of owner-managers of the impact of networking on business performance. Following the quantitative phase, fifteen in-depth face-to-face semi-structured interviews were conducted with selected owner-managers of SMEs, forming a judgmental selection, to explore their experiences, beliefs, and attitudes with respect to networking factor.

Results - Both quantitative and qualitative phases of the study found that networking was a significant factor in influencing the success of SMEs. The concept of wasta, the Arabic word for connections, emerged from the qualitative phase. Findings show that using wasta, through politico-business networks is important since it enables access to current information that is crucial for the success of SMEs. The concept of wasta was also mentioned in relation to financial resources and suppliers. Findings revealed that strong relationships with suppliers enable firms to get financial resources in the form of trade credits. Furthermore, the relationship between wasta and human resources was also revealed. Findings showed that owner-managers use their network relations through wasta in order to recruit their staff.

Implications - The findings of this study add to the understanding of networking in Arabic countries with the importance of wasta in an economy that functions on relationships. The findings of this study could therefore be useful to international managers to assist their intercultural effectiveness by adjusting to culture-specific networking in Tangier.

Value - This study supports previous findings of Hutchings & Weir (2006) and contributes additional evidence that suggests the significance of wasta and its impact on SME success.

• Item Type: MPRA Paper
• Language: English
• Keywords: Networking, Wasta, Performance, SMEs, Arabic, Tangier
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M19 - Other

References

Ahl, H. J. (2003). Ways to study the text of entrepreneurship. Reykjavik, Iceland.: Scandinavian Academy of Management.

Aldrich, H. E., & Reese, P. R. (1993). Does networking pay off? A panel study of entrepreneurs in the research triangle. In N. Churchill, S. Birley, & J. Doutriaux, Frontiers of Entrepreneurship Research (pp. 325-339). Massachusetts: Wellesley.

Aldrich, H., & Zimmer, C. (1986). Entrepreneurship through social networks. In Sexton, D. & Smiler, R. (eds.), The Art and Science of Entrepreneurship: (pp.3-23). New York: Ballinger.

Batjargal, B. (2006). The dynamics of entrepreneurs’ networks in a transitioning economy: the case of Russia. Entrepreneurship & Regional Development: An international journal , 18 (4), 305-320.

Barringer, B. R., & Harrison, J. S. (2000). Walking a tightrope: creating value through interorganizational relationships. Journal of Management , 26 (3), 367-403.

Birch, D. (1989). Change, innovation, and job generation. Journal of labor research , 10 (1), 33-38.

Bolton Committee Report. (1971). Report of the Commission of Inquiry on Small Firms. London: HMSO .

Carter, N. M., Brush, C. G., Gatewood, E. J., Greene, P. G., & Hart, M. M. (2003). Financing high-growth enterprise: Is gender an issue? In S. West, K. Farris-Berg, H. Antecol, L. McCall, P. M. McGovern, N. M. Carter, et al., Critical junctures in women's economic lives: A collection of symposium papers (pp. 45-51). Minneapolis, MN: The Centre for Economic Progress.

Carson, D. Cromie, S. McGowan, P. Hill, J. (1995). Marketing and Entrepreneurship in SMEs: an innovative approach. Hemel Hempstead: Prentice Hall.

Child, J. (1973). Predicting and understanding organization structure. Administrative Science Quarterly , 18 (2), 168-185.

Coleman, J.S. (1988). Social Capital in the Creation of Human Capital. The American Journal of Sociology: Supplement, Organizations and Institutions: Sociological and Economic Approaches to the Analysis of Social Structure. 94. pp. 95-120.

Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing , 9 (5), 371-395.

Cunningham, R.B. and Sarayrah, Y.K. (1993), Wasta: The Hidden Force in Middle Eastern Society, Praegar, Westport, CT.

Curran, J., & Blackburn, R. A. (2001). Researching the Small Enterprise. London: Sage Publications.

Dodd, S. D., & Patra, E. (2002). National differences in entrepreneurial networking. Entrepreneurship Regional Development , 14 (2), 117-134.

Dockel, J., & Ligthelm, A. (2005). Factors Responsible for the Growth of Small Businesses. South African Journal of Economic and Management Sciences , 8 (1), 54-62.

Donckels, R., & Lambrecht, J. (1995). Networks and small business growth: An explanatory model. Small Business Economics , 7 (4), 273-289.

Dosoglu-Guner, B. (2001). Can organizational behavior explain the export intention of firms? The effects of organizational culture and ownership type. International Business Review , 10 (1), 71-89.

Duchesneau, D. A., & Gartner, W. B. (1990). A profile of new venture success and failure in an emerging industry. Journal of Business Venturing , 5 (5), 297-312.

Fogli, A., & Fernández, R. (2009). Culture: an empirical investigation of beliefs, work, and fertility. American Economic Journal , 1 (1), 146-177.

Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth ventures. The Academy of Management Journal , 46 (3), 374-384.

Jarillo, J. C. (1989). Entrepreneurship and growth: The strategic use of external resources. Journal of Business Venturing , 4 (2), 133-147.

Jenssen, J. I. (2001). Social networks, resources and entrepreneurship. The International Journal of Entrepreneurship and Innovation , 2 (2), 103-109.

Jenssen, J. I., & Greeve, A. (2002). Does the degree of redundancy in social networks influence the success of business start-ups. International Journal of Entrepreneurial Behaviour & Research , 8 (5), 254-267.

Julien, P. -A. (1993). Small businesses as a research subject: Some reflections on knowledge of small businesses and its effects on economic theory. Small Business Economics , 5 (2), 157-166.

Hansen, E. L. (2001). Resource acquisition as a startup process: Initial stocks of social capital and organizational foundings. Retrieved February 05, 2010, from http://fusionmx.babson.edu/entrep/fer/IV/IVB/IVB.htm

Harris, S., & Wheeler, C. (2005). Entrepreneurs’ relationships for internationalization: Functions, origins and strategies. International Business Review , 14, 187-207.

Havnes, P. -A., & Senneseth, K. (2001). A Panel study of firm growth among SMEs in networks. Small Business Economics , 16 (4), 293-302.

Hite, J. M. (2005). Evolutionary processes and paths of relationally embedded network ties in emerging entrepreneurial firms. Entrepreneurship Theory and Practice , 29 (1), 113-144.

Hutchings, K., & Weir, D. (2006). Understanding networking in China and the Arab World: lessons for international managers. Journal of European Industrial Training , 30 (4), 272-290.

Hustedde, R. J., & Pulver, G. C. (1992). Factors affecting equity capital acquisition: The demand side. Journal of Business Venturing , 7 (5), 363-374.

Iacobucci, D. (1996). Networks in marketing, Thousands Oaks, CA, Sage Publications. Gorgievski, M. J., Ascalon, M. E. & Stephan, U. (2011). Small business owners’ success criteria, a values approach to personal differences. Journal of Small Business Management, 49 (2), 207-232.

Grant, P., & Perren, L. (2002). Small business and entrepreneurial research: meta-theories, paradigms and prejudices. International Small Business Journal , 20 (2), 185-211.

Guthrie, D. (1998), “The declining significance of guanxi in China’s economic transition”, The China Quarterly, No. 3, pp. 254-82.

Guzman, J., & Santos, F. (2001). The booster function and the entrepreneurial quality: An application to the Province of Seville. Entrepreneurial and Regional Development , 13 (3), 211-228.

Ibarra, H. (1993). "Personal networks of women and minorities in management: A conceptual framework," Academy of Management Review, 18, 55-87.

Ireland, R. D., Hitt, M. A., Camp, M. & Sexton, D. L. (2001). In¬tegrating Entrepreneurship and Strategic Management Actions to Create Wealth, Academy of Management Executive, 15(1): 49-64.

Larsson, E., Hedelin, L., & Garling, T. (2003). Influence of expert advice on expansion goals of small businesses in rural Sweden. Journal of Small Business Management , 41 (2), 205-212.

Lewis, K., Massey, C., & Harris, C. (2007). Learning by doing: six dimensions of complexity in researching SMEs. Qualitative Research in Accounting & Management , 4 (2), 151-163.

Li, D., & Ferreira, M. P. (2006). The evolutionary model of entrepreneurial firms' dependence on networks: Going beyond the start-up page. Notas Económicas , 24, 48-63.

Ligthelm, A. A. (2010). Entrepreneurship and small business sustainability. Southern African Business Review , 14 (3), 131-153.

Low, M.B. and MacMillan, I.C. (1988). “Entrepreneurship: past research and future challenges,” Journal of Management, 14 (2), 139–162.

Luo, Y. (2007), Guanxi and Business, 2nd edition, World Scientific, Singapore.

Man, T. W., & Lau, T. (2005). The context of entrepreneurship in Hong Kong: an investigation through the patterns of entrepreneurial competencies in contrasting industrial environments. Journal of Small Business and Enterprise Development , 12 (4), 464-481.

Markman, G., & Baron, R. (2003). Person-entrepreneurship fit: Why some people are more successful as entrepreneurs than others. Human Resource Management Review , 13 (2), 281-301.

McCline, R., Bhat, S., & Baj, P. (2000). Opportunity recognition: An exploratory investigation of a component of the entrepreneurial process in the context of the health care industry. Entrepreneurship Theory and Practice , 25 (2), 81-94.

Ministère de l'Industrie, du Commerce et des Nouvelles Technologies. (2007). Retrieved November 9, 2009, from http://www.mcinet.gov.ma/Pages/default.aspx

Ministère de l'Industrie, du Commerce et des Nouvelles Technologies. (2011). Secteur industriel: tableau de bord annuel. Régions économiques. Rabat: Ministère de l'Industrie, du Commerce et des Nouvelles Technologies.

Putnam.R.D. 1995. Bowling alone: America’s declining social capital. Journal of Democracy. 6. pp. 65-78.

Ramsden, M., & Bennett, R. J. (2005). The benefits of external support to SMEs: 'Hard' versus 'soft' outcomes and satisfaction levels. Journal of Small Business and , 12 (2), 227-243.

Ritter, T., & Gemunden, H. G. (2004). The impact of a company’s business strategy on its technological competence, network competence and innovation success. Journal of Business Research , 57, 548– 556.

Sequeira, J. M., and Rasheed, A. A. (2006). "Start-up and Growth of Immigrant Small Businesses: The Impact of Social capital and Human Capital," Journal of Development Entrepreneurship, 11( 4), 357-375.

Storey, D. J. (1994). Understanding small firms. London: Routledge.

The European Commission . (2011). Are EU SMEs recovering from the crisis? Annual report on EU small and medium sized enterprises 2010/2011. Rotterdam: ECORYS Nederland BV.

The World Bank. (2007). Doing Business au Maroc: Comparant la réglementation en 8 régions. Washington: The World Bank.

Tsai, W., Ghoshal, S. (1998). Social capital and value creation: the role of intrafirm networks. The Academy of Management Journal, 41 (4), 464-476.

UNECA. (2008). Les petites et moyennes entreprises acteurs de développement durable en Afrique du Nord. Rabat: UNECA.

Watson, J. (2007). Modeling the relationship between networking and firm performance. Journal of Business Venturing , 22 (6), 852–874.

Weir, D. (2002). Human resource development in the Arab Middle East: a fourth paradigm. In M. Lee, HRD in a complex world (pp. 69-82). London: Routledge.

Wincent, J., Anokhin, S., Boter, H. (2009). "Network board continuity and effectiveness of open innovation in Swedish strategic small-firm networks", R&D Management, 39 (1), 55-67.

Yang, M.M. (2002), “Rebuttal: the resilience of guanxi and its new deployments: a critique of some new guanxi scholarship”, The China Quarterly, No. 170, pp. 459-76.

Zaheer, A. and Bell, G. G. (2005). "Benefiting from network position: Firm capabilities, structural holes, and performance", Strategic Management Journal, 26 (9), 809-825.

Zhao, L., & Aram, J. D. (1995). Networking and growth of young technology-intensive ventures in China. Journal of Business Venturing , 10 (5), 349-370.