How Cultural Understanding Influences Business Success in Middle East and North Africa (MENA)

Technological innovations in communication, transportation, and the internationalization of national markets has led leaders of corporations of all sizes to increase interconnectedness and relationships within all aspects of life. Distance is no longer a barrier, the world has been shrinking and hierarchical geopolitics are flatter; that is, the world has become smaller and national boundaries matter less. This increased integration has benefited economic growth and the interrelationship among various cultures and people. Economic interdependence has led to increased competition among corporations to achieve sustainability and expand demand for products and services to meet customers’ expectations. Geopolitical boundaries do not restrict seemingly borderless businesses in the fields of information access, education, markets, capital, products, and services. This situation is very different from 19th century railroad transportation and 20th century mass-production manufacturing in which competition operated mainly amongst neighboring regions. Three emblematic factors characterize globalization: the technological revolution, cross-regional dialogue, and cultural diversity, which have proved to be catalysts for the growth of business. Developments in technology have caused organizations to change the business culture and change how people communicate between organizations. Friedman [10] linked information advancements to the world he described as flattened and shrinking, driven by culturally diverse organizations that value diversity of people. Noting technology’s transformative potential, Friedman [10] explained, “With interconnectivity, work could be moved around to the four corners of the world through the creation of a global platform for a global workforce of people” (p. 67). The specific problem is that American multinational organizations operating in MENA may lose business opportunities due to the lack of business leaders’ understanding of cultural differences. American global organizations possibly encounter weakened organizational performance because of the shortage of culturally competent American business leaders regarding the cultures of the MENA region [19][22][25]. This paper exposes the importance of increased insight into cultural differences, which may enable leaders to achieve substantial results by appropriately preparing employees to accomplish organizational missions. Focusing on cultural differences could assist educators, leaders to develop strategic cross-cultural approaches to transform educators, managers into global strategic leaders. Leaders may need to seek a deeper understanding of the peculiarities of the host culture and style of leadership and management, and to look for continual improvement. Introduction: Globalization enabled United States corporations to increase the company’s share of the global market [30] as well as assert a company’s presence in the global economy. Altman [4] suggested that success in securing increased global market share indicates evidence of corporate adaptations to a global marketplace environment characterized by a rapid pace, broad scope of evolutionary changes, rapid diffusion of innovation, and unpredictable changes. Friedman [10] perceived internationalization of business activity as an advantage, stimulating further high-tech development and investments that provide a platform for delivering intellectual work globally. Leaders seeking to invest abroad may need to assimilate practices to carry out or avoid when attempting to form business relationships in MENA. A United States federal government agency, the Overseas Private Investment Corporation (OPIC), has been instrumental in promoting and assisting United States multinational corporations operating overseas. A survey conducted in 2014 shows that 52% of multinational corporations (MNCs) surveyed aspire to increase business operations globally and only 15% planned to develop leaders with cultural competence [30]. This discrepancy may lead to a loss in pool of global leadership and a critical gap in cross-cultural skills [30]. For an organization to enhance organizational performance and remain globally competitive using cross-cultural understanding as an effective tool to benefit from commerce and global acceptance, it must ensure that its business leaders gain competencies in cross-cultural skills. The general problem is a shortage of culturally competent leaders in multinational corporations (MNCs) able to meet the unique challenges of global leadership [8][18][32]. Caligiuri and Tarique [7] professed that business leaders of most global companies should view cross-cultural literacy as the most essential competency in international markets. An inadequate understanding of cultural and business differences may jeopardize performance of organizations doing business across borders [2][7][12][16][23][28]. American global organizations may lose business opportunities and possibly encounter weakened organizational performance because of the shortage of culturally competent American business leaders regarding the cultures of the MENA region [18][19][22][25][32]. Religious differences, Islamic culture, and religious values. Scholars should consider the impact of religion on leadership practices [21][34]. In a study of the three Abrahamic monotheistic religions of Judaism, Christianity, and Islam, Kriger and Seng [21] found that some basic premises of the monotheistic religions shape the behavior of leaders and organizational cultures. In contrast, Van Buren and Greenwood [33] asserted that leadership style moderates the effect of personal spiritual beliefs and spiritual practices of leaders on strategic decision-making processes. Each religion has a particular ethical standpoint toward the content of religiosity, which may comfort the decision-maker and assist the decision-making process [34]. Personal spiritual beliefs affect the behavior and strategic decisions of top-level leaders and such beliefs affect the measurement and adjustment of the spiritual climate of the leaders’ organizations. Other researchers have claimed that spiritual and religious beliefs influence leadership style in the way leaders develop new skills and provide information relied upon in the workplace [27][34]. As cultures vary in different Middle Eastern countries, leaders of the region may interpret the company’s business practices and frame personal reactions according to the individual’s cultural background and assumptions [11]. Islam is the prevailing religion in the MENA countries, and leadership style tends to be highly authoritarian because Islam promotes obedience, loyalty, and respect for seniority as work-related values [20]. Similarly, where Muslim observance is strong, fatalism plays an important part in the daily lives of organizational members [17]. Chu and Mustafa [9] debated that some of the practices, such as strict gender divisions in traditional Islam, are not tenets of the faith but a misguided tradition. Such attitudes toward authority imply that Muslim leaders may tend more toward the laissez faire, autocratic, and charismatic leadership styles. Lack of political freedom and liberties and the opacity of regional autocracies tend to block democratic reforms. In Western culture, management styles tend to emphasize performance [13]. For individualists, priorities are set based on individual and immediate family considerations [6]. Islam influences family relations and orientation, hierarchical distance, and collectivism resulting in dominant paternalism. For collectivists, the needs of the group far outweigh needs of a few individuals [6]. Ali [3] stated Islam can play an influential role and can contribute to shaping the mindset of individual and group behavior among Arabs. Islam governs all aspects of life within Arab society and Ali ascribed certain behavioral characteristics to its members: (a) a deep sense of family honor, (b) pay more respect to elderlies and (c) respect for Arabic as the language of the Qur’an, the text of Islamic faith. Some research has shown that Arab leaders are bureaucratic, paternalistic, and autocratic with a weak future orientation. For example, Abdalla and Al-Homoud [1] found effective Islamic leaders are individuals who are charismatic and righteous religious role models who lead followers to the leader’s ideals. In contrast, Ali [3] argued Christianity places an emphasis on authority figures as sources of power in organizations whereas Islam focuses more on flatter and leaner organizational structures. In the Arab world, variations in history, religion, and tribal affiliations add diversity to the cultures of the various countries [5][35]. Although not all Arabs are Muslim, Arab culture and tribalism within Islam inspires the Arab way of life in the Middle East and other regions in the world [26]. The central objective of Islam is to promote human welfare through socioeconomic justice and adherents consider it one of the most important teachings of Islam. Distribution of wealth is one of the five pillars of Islam, along with faith, prayer, fasting, and pilgrimage to Mecca, which indicates the connection of spiritual and economic practices, and the need for social justice while promoting economic development. The aim of Islamic monotheism is to associate social justice with the collective good and includes democracy, human rights, equality, and critical thought. Islamic philosophy promotes ethical principles through religious requirements that influence business decision-making processes, so Muslims associate principles with faith in Islam. Islamic law of human conduct regulates many aspects of Muslims’ behavior and influences individuals’ ethical behavior toward kin, opportunities, individual practices, ethics, peer pressure, administrative necessities, government regulations, and community demands to promote ethical conduct. Economically, critics of globalization recogniz