Indigenization of staffing in MNEs: The case of Saudi Arabia

Abstract

In the Gulf States, there has been increased emphasis on requiring MNEs to indigenize their staffing. Based on a survey of 157 HR directors in MNEs headquartered in Saudi Arabia, this article explores why so little headway has been made through applying and extending Resource Curse Theory. Surprisingly, we found formal ties with government had little effect; Resource Curse Theory would suggest this would be due to the concentration of regulatory scrutiny and support on the oil and gas industry, where, indeed, indigenization was most pronounced Again, although they may compensate for regulatory shortfalls, we found intra firm ties made little difference in advancing indigenization. Again, Resource Curse Theory would suggest that non-minerals sectors suffer a drain in capital and human resources, which would make indigenization more challenging. Resource Curse Theory assumes that mineral endowments negatively impact on macroeconomic and societal outcomes, but only accords limited attention to how these pressures are transmitted via organizations. Through providing organizational level evidence, we both further illuminate Resource Curse effects in practice, and contribute to extending the base and scope of application of the theory. We draw out the implications for practice.