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Int. Studies ofMgt. & Org.. Vol. 20, No. 3 , pp. 7-35.M. E. Sharpe, Inc., 1990.

ABBAS J. Au(USA)Management Theoryin a Transitional Society:the Arab's ExperienceIntroduction

Students of international comparative management have longrecognized the impact of industrialization on developing nations.They detect that, in their quest for economic progress, the devel-oping countries would face managerial and social problems. Inthe context of management, two issues stand out: the transfer ofWestern management techniques and practices, and the selectionof appropriate models to achieve ambitious developmental goals.Among the developing nations, the Arab states provide a uniquesetting for social-science analysis and study, due to the complex-ity, direction, and rate of changes.

Oil-based wealth has changed Arab societies, but its effectshave not yet been sufficiently scrutinized (Ibrahim, 1982). Thediscovery of oil and the dramatic increases in oil revenue after1973, while solving some of the economic problems of the Arabcountries, created a totally new set of social problems (e.g.,abrupt change in societal structure and lifestyle). The latter areThe author is Professor of Comparative Management and Business Policy atIndiana University of Pennsylvania, Indiana, PA. He wishes to thank Profes-sors Robert C. Camp and Paul Swiercz for their comments on an earlier ver-sion of this article.


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8 ABBAS J. AU (USA)

more difficult to deal with as they are often unforeseen, almostwithout precedent, and therefore cannot be solved by example(Kay, 1982). M ore complex still are the problems associated withthe declining oil prices after 1982, and flie uncertainty surround-ing prices since that time. Econom ic, social, and political expec-tations of groups and individuals are constantly changing. Assuch, changes in group alliances, priorities, ideologies, motiva-tion, and values become the norm (Aii, 1988a).

This paper takes the position that Arab management thou ght isfragmented and suffering from a crisis in direction and identity.The objective is to shed light on the forces that shape and impedethe evolution of management theory and practice in the Arabworld. Economic instability and turmoil, and the ever-changingsociopolitical environment in the area, have had tremendous in-fluence pn managerial perceptions and behaviors. Managers areincreasingly unable to meet the demands of conflicting forces(e.g., political elites, tribal networks, employees, stockholders).Current managerial thinking and practices can be best understoodin the context of ongoing struggle between old and new socialclasses, between the forces of change and the forces of s tability.It is within the context of this fluidity and fragmentation of theArab world, and of continuing rivalry among various interestgroups, that one can comprehend the culture of management inthe Arab world.Historical influences on Arab m angement though tBerque (1970) argues that for over fourteen centuries, an im-mense layer of thought, behavior, and work has had a majorimpact on Arab individuals. The impact, however, has produceddifferent reactions and behavior at various times and in differentsituations. This means that various historical factors have influ-enced modem Arab managem ent practices. These factors tend toreinforce each other and to color approaches for managementdifferentiy, depending upon the forces they exert in various re-gions or states. Five factors appear to be particularly significant.


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MANAGEMEm- THEORY IN A TRANSITIONAL SOCIHY 9

They are: (a) Isalmic influence, (b) tribal and family traditions,(c) die legacy of colonial bureaucracies and the Ottoman Em pire(1412-1918), (d) increasing contact with Westem nations in re-cent decades, leading to increased pragmatism, and (e) govern-ment intervention and political constraints. These five factorswill be discussed briefly.The influence of IslamIt is fair to suggest that many Arab management practices arerooted in the Islamic and pre-Islamic empires. The ancientSumerians, for example, recognized the need for better control oftheir resources, and developed the first reporting procedu res. TheEgyptians made tremendous strides in organizing physical andhuman resources in the construction of the pyramids and othervast architectural projects. During the first six centuries of Islam(since the sixth cen tury), knowledge, trade, industry, agriculture,and construction of complex organizations flourished. Work andcreativity were honored in all their forms. Quranic principles andprophetic prescriptions served as guides for Muslims in conduct-ing their business and family affairs. Izeeddin (1953: 30-31) ex-amined the contributions of the Arabs to organized work, notingthat:

The industries and trades were organized in corporations orguilds. These corporations were of great social importance. Theymaintained the standard of craftsmanship and prevented underhandcompetition, thereby insuring a friendly society. Based on religiousand moral foundations, they impressed upon their members a senseof duty toward one craft and toward one another. Honesty and sobri-ety were characteristic qualities of Moslem artisans. A tradition ofmutual aid prevailed.

Notwithstanding differences among the members in wealth andrank, social solidarity and social duty were emphasized, and thehumblest member was assured a place in the social order.Current management thinking and practices continue to be in-

fluenced by various Islam ic schools of thought. Aii (1964), in an


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10 ABBAS J. AU (USA)

effort to bring order to this vast bo dy, of experience, dividesIslamic thought into six schools. Since there is no separationbetween state and religion in Islam, these schools have had aprofound influence on various political and economic structuresin Islamic and Arab states. The first, Jabria, emphasizes compul-sion or predestination. This school asserts that man is not respo n-sible for his actions, and that tradition m ust take precedence overthe power of choice. It relies on clearly defined rules and com-plete obedience to authority. For this school, a man does not needto use rational arguments, but only to follow and accept theleader's instructions. An extreme version of this school, calledSifatias (attributes), asserts that man has no power, knowledge,or free will. It adheres strictly to the doctrine of predestination inall its gloominess and intensity. The role of the absolute leaderwho has answers to everything and provides rewards or punish-ment is glorified. Organization and organizational work-grouproles are subordinate to the role of the authority figure.The second school is the Tafwiz. This school emphasizes freewHl and unqualified discretion in the choice of wrong and right,because rules and regulations constrain human and organiza-tional life. In the organizational context, there should be no clearsets of responsibilities and duties. Employees assume differenttasks and duties, and collective responsibility is preferred.

The third is the Ikhtiar school, which shares the Tafwiz em-phasis on free choice, but differs in the beliefs about man's ca-pacity to tum evil into good. Unlike the Tafwiz school, it stressesthat man is at liberty to commit a good or bad deed, pain or joy,and that he is solely responsible for his actions. M an is believedto be a responsible social actor striving to work with the groupand to achieve the group goals in harmonious and cooperativeenvironmentThe Mutazilas, or the rationalistic school, believes that allknowledge must be attained through reason. This school holdsthat nothing is known to be wrong or right until reason has en-lightened us to the distinction; and, further, that everything isliable to change or annihilation. As in the Ikhtiar school, the


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M A N A G E M E t fT T H E O R Y I N A T R A N S T T I O N A L S O C I E T Y 11

Mutazilas believe that performance is the criterion for rewardand punishment. Man is capable of distinguishing between rightand wrong . It maintains that free w ill and democracy are p rereq-uisites to action and the prosperity of society. Denial of abilityand free will stifles creativity and destroys the soul.T he fifth school of thought, advocated by Ibn-Rushd (orAverroes, c. 1126 AD), holds that actions depend partly on freewill and partly on extemal environmental forces that serve torestrain and/or determine individual and collective actions. Theparticipative dem ocratic process is thought to be the ideal organi-zational form, and autocracy is believed to open the door tohimian misery. F urthermore, this school believes that perfectioncan only be attained by study and speculation, not by mere sterilemeditation. In addition, women are considered equal in everycapacity to men.The sixth and the final school, the Ikhwan-us-Sctfa (Brothers of

Purity) arose in the tenth centuiy in response to the oppressivepractices of the Jabria school. During the tenth century, liberal-minded thinkers and philosophers were tortured and prosecuted.Neve rtheless, a small body of thinkers formed themselves into abrotherhood to hinder the downward course of the Moslems to-ward ignorance and narrow-mindedness. They established secretorganizations across the Islamic nation and used letters as a wayto disseminate thought The school advocated rationalism, self-discipline, and self-control. Ikhwan-us-Safa believed that faithwithout work and knowing without practice were futile. Theydisplayed a strong faith in man's ability to make progress andcontrol the environment. A lthough this school contributed to set-ting high moral standards in commerce and politics, its maincontribution was the belief that liberty of intellect is an essentialprecondition for a creative and healthy society. They believedthat corruption and disorder are sym ptomatic of tyranny.The above schools had tremendous infiuence on the way inwhich states were organized and on the way business and personaltransactions were conducted ia various parts of the Arab world.For example, the Ommayyad Em pire (661 -750) subscribed to the


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12 ABBAS J. ALI (USA)

Jabiia School, whereby centralization of. government affairs andstrict adherence to specified rules were the norm.The rationalistic view, and the Ikhtiar or Mutazilas form s, pre-vailed diiring the enlighted Abbassid's Caliphs Mamun andMutasim and in the Fadmide state. During tfie Fadmides era(969-1171), the power of the mind, the concept of liberty, andthe role of knowledge were promulgated. The increasing influ-ence of non-Arab elements in the Muslim world contributed tothe gradual disappearance of this participative approach and tothe solidification of traditional or authoritarian forms of gov em -menL The defeat of the Arab Caliph and the ascendancy of thenon-Arab Ottoman Empire (1412-1918) helped to institutional-ize autocracy and furthered the demise of trade association andfreely organized business activities in Arab lands. The Turks,historically, have looked upon their chiefs as the direct descen-dants of God; conversion to Islam did not erase this belief (Ali,1964). Their adherence to the Jabria school and its associatedfanaticism influenced the theological perspective of the Arabsduring the Ottoman Empire.Just after the Arabs gained their independence in the twentiethcentury, they established similar authoritarian regimes in the newnation-state (e.g., Algeria, Iraq, Morocco, Saudi Arabia, Syria,Tun isia). Independent thinking, concepts of liberty, and pow er ofmind were condemned, and Jabria principles were sanctioned inevery aspect of life.

The above schools, except the Jabria, have become part ofhistory. Some of the newly established nation-states outlawedimagination and feared freedom and information. Single-mindedthought is advanced to serve the goals of each regime. Arabgovernments, both the conservative and self-proclaimed radical,exploit the influence of Islam on the life of population. Reli-gious figures (e.g., sheikhs or mullahs) have been recruited andappointed as mosque functionaries, teachers, and judges. Theyare given titles and lucrative salaries, and many have becomepaid employees of the state bureaucracy. They exist to legiti-mize and justify the power of unjust rulers. Their roles vary


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M A N A G E M E N T T H E O R Y I N A T R A N S I T I O N A L S O C I E T Y 13

slightly from one state to another, but their function remains thesame. In Saudi Arabia, they play very vital roles and have beenintegrated in daily functions of govemment (e.g., approving newlaws, advising, and participating in official ceremonies). InEgypt and Iraq, on the other hand, their roles are highly regu-lated and the govemment makes sure they do not exceed theirprescribed limits.The Quran (Holy Quran, 1981) contains many references tothe conduct of business. For example, "Do not exchange yourproperty in wrongful w ays unless it is in trade by m utual agree-me nt" (4:30); and "It is He Who has m ade the earth subservientto you. You walk through its vast valleys and eat of its suste-nance" (67:15). Islam also has specific prescriptions regardinginvestments and the undesirabUity of preventing commoditiesfrom circulating, depriving the owner as well as the communityof their benefits. For examp le: "Those w ho hoard gold and silverand do not spend for the causes of God, should know that theirrecompense w ill be a painful torment on the day of Judgment andthat their treasures will be treated by the fire of Hell and pressedagaiast their foreheads, sides and back with this remark, 'Theseare your own treasures which you hoarded for yourselves. See foryourselves what they feel like.' "

There is a contradiction between the ideal, as specified in theQuran and Prophet Mohammed's sayings, and reality in the Is-lamic Arab w orld. For example, interest charges on loans as w ellas bribes (money and gifts given or promised to a person in aposition of influence to facilitate deals or change his or her con-duct) are publicly acknowledged in most Arab states. On manyoccasions, in fact, business cannot be conducted without bribesbeing given. Islam, however, considers interests and bribes sin-ful. The majority of financial institutions in the region adopt thepre-determined rate of interest on loans. Muslim thinkers believethis is not Islamic. They suggest an interest-free banking system.The principle of this system is that profits and risk should beshared by both partners (lenders and borrowers) in the loan trans-action (Boase, 1985). Likewise, bribery is a customary practice


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in the region, even though it was condemned by P rophet Moh am-med, who said: "Those who offer and those who accept bribesare in helL"Another contradiction is related to the process of consultation.In conducting business and political affairs, true adherents ofIslam present consultation among peers as religiously positive, asthis statement from the Quran attests: "Reward will be for thosewho conduct their affairs with consultation among themselves."Rulers and religious leaders, however, have chosen to emphasizeother passages of the Quran that instruct believers to obey God,the Prophet, and those in positions of leadership. For example,"God grants His authority to whom He wishes" (2:247), and"Obey God, and obey the apostle, and those charged with author-ity among you" (4:59). Thus, there is a high tension betweenparticipatory or consultative approaches, on the one hand, andauthoritative approaches to managem ent, on the other.Tribal and family traditionsTribal traditions sanction consultation in the condua of all as-pects of life. It is the practice of tribal societies that members ofthe entire kinship network should be consulted on matters impor-tant to their collective welfare. However, the tribal mentality andrivalry among tribes also encourage authoritarian approaches todealings with non-kin, such as other tribes or o ther segments ofsociety. Arabs tend to develop intense loyalty to their own tribesor regional groups, but at this time do not appear to find it easy todevelop mutually beneficial affiliations with larger entities, assometimes was done during the early years of Islam.The Islamic tribal-family tradition that is termed sheikdom hasbeen a major influence in this regard. Managers so influencedbehave as fathers, i.e., as protectors, caregivers, and those whoshoulder all the responsibilities of business. While the above char-acteristics are not necessarily negative (e.g., caring about the we l-fare of employees, and personalized subordinate relations), theydo suggest an authoritarian m anagement style.


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The authoritarian structure is particularly apparent in large or-ganizations. Most Arab organizations, whether public or private,are highly centralized and ad opt an authoritarian (functionaltype) structure, regardless of corporate strategy or technology.Islamic tribal-family traditions reinforce certain other values

and norms as well, which center around what constitutes ac-cepted behavior and ideas of right and wrong. The Islamic tribal-family orientation induces supervisors to ascribe to what istermed "outer-directed" values, i.e., conformist and sociocentric,rather than democratic beliefs. The outer-directed manager, forexample, tends to adapt to his or her situation in life and does not"rock the boat." Outer-directed managers tend to prefer struc-tured situations and adherence to policies and group n orms. Fu r-thermore, outer-directed managers tend to prefer stable workenvironments and do not set goals or engage in innovative behav-ior. Instead, they implement som eone els e's p lan.Managerial approaches to creativity and problem solving arealso influenced by tribal perceptions. Teamwork and cooperationto achieve organizational goals are difficult to realize. The pro-cess of socialization in the family tribe environment does little toprepare individuals to work within groups outside the family andthe tribe (Ali, 1988a; Ayoubi, 1986). There is always an attitudeof "we" and "they." Any interest that does not belong to the innergroup or tribe is considered secondary. Creativity and uniquenessin problem solving are not encouraged. Any approach that doesnot conform to acceptable norms is considered a threat to estab-lished authority and organization stability.There are numbers of public examples that demonstrate the

consequences of tribalism. Li Iraq, for example, a confUct be-tween two powerful senior managers in a state enterprise wassolved by the creation of two companies headed by each ofthema typical tribal practice of treating equally and pleasingfavored rivals (sons or relatives). In Saudi Arabia and other Gulfstates, employees in the public sector from powerful families arenot required to report to work, they just receive monthly pay-checks.


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The legacy of the Ottoman Em pireand colonial bureaucraciesThe third major influence on Arab management styles is thebureaucratic legacy of colonial status (both Ottoman and Euro-pean). Arab administration has remained captive of the bureau-cratic structures and systems inherited from the long periods ofoccupation and colonization (El-Tayeb, 1986). The Europeancolonists attempted to introduce efficiency and to improve indig-enous skills for efficient operation of the civil service systems.The Ottoman Empire, however, demanded complete obedienceand condemned creativity and independent thinking. Both ofthese influences are reflected in orientations that stress central-ization of authority, rigid rules and regulations, division of labor,and low tolerance for ambiguity and autonom y.

The colonial bureaucratic and Ottoman autocratic system s, andtribalism, gave rise to what can be termed "sheikocracy." Thisterm is a modified version of what Abd-Al-Khaliq (1984) andother called "bedoucracy"solving contemporary problems byusing traditional methods. According to Al-Kubaisy (1985),"sheikocracy" is a product of the interaction of bureaucratic andsheiko orientations and behaviors. He indicates that, due to in-dustrialization and the introduction of m odem organizations intothe Arab world, managers have to adapt to new demands (e.g.,clarification of authority and responsibility, efficiency, civillaws) while observing traditional values and norms (e.g., per-sonal relations, preference for individuals from influential tribes,open-door policy). The chareicteristics of sheikocracy are: hierar-chical authority, rules and regulations contingent on the persona l-ity and power of the individuals who make them, an "open door"policy, subordination of efficiency to human relations and per-sonal connections, indecisiveness in decision m aking, informalityaniong lower-level managers, and a generally patriarchal ap-proach. Nepotism is often evident in selecting upper-level man-agers, but qualifications are emphasized in the selection ofmiddle- and lower-level personnel. Chain of command, scalar


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principles, and division of labor are also characteristics of thesheikocracy.Western contacts and the growth of pragmatismThe fourth major influence on Arab management is a more cur-rent one, and relates to the growing role of pragmatism in thearea (Aii, 1987a). Oil revenues, a rising new middle class, andimproved education, health care, comm unications, and m obility,in combination with increased interaction with industrial cul-tures, have strengthened the influence of pragmatic values andapproaches. The pragmatic manager tends to be aware of themisuse and waste of organizational resources, and is sensitive tothe image of his or her organization. This new perspective onmanagement has been introduced, in a limited fashion, through-out different parts of the Arab world. Flexibility, a systems ap-proach, acceptance of multiple roles as opposed to strict divisionof labor, and tolerance for ambiguity and diversity are slowlybeing incorporated into Arab m anagerial practices. Further expo-sure to W estem approaches, the increasing intemationalization ofbusiness, and the uncertainty surrounding the future of Arab eco-nomic development due to political and economic instability canbe expected to lead to greater emphasis on pragmatic approachesto management among businessmen and enlighted elites. Thetask of pragmatic managers, however, is formidable. They facethe resistance and doubt of the political rulers and of the conser-vative segments.Government intervention and political constraintsA fifth and more recent major infiuence on managerial thinkingand practices in the Arab world is govemment intervention andpolitical constraints. The nature and role of govemment havechanged since the late 1950s. Two factors have contributed tosuch changes: the rise of self-claimed socialist states in someparts of the Arab world (e.g., Algeria in 1962, Egypt in 1952,


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Iraq in 1958) and increasing oil revenue in som e other states andthe subsequent introduction of state planning (e.g., Saudi A rabiaintroduced its first development plan in 1970). Arab govem-ments, preoccupied with their own survival, often neglect thestrategic importance of economic and human dev elopment. In theself-declared socialist states (Iraq, Libya, Syria), fearful govem-ments have hindered the development of indigenous managerialpractices. Because of colonial influences, these states have his-torically enjoyed a relatively capable m anagerial class. However,as socialist governments took ov er, they recruited loyal politicalcareer party members and army officers to replace professionalmanagers.The conservative states (e.g., Saudi Arabia, Kuw ait, Qatar), onthe other hand, have traditionally suffered from a lack of profes-sional managers. As a result of oil discoveries and economicexpansion, new opportunities were opened to the indigenous pop -ulation to gain skills and to become involved in business activi-ties. The last two decades (until the start of the Iraq-Iran W ar in1981) witnessed govemment support for econom ic activities thatfurthered the development of independent managers. However,the Iraq-Iran War led to govemment intervention in businessactivities.The most destructive policy in the Arab world is related towhat Ali (1986a) termed a "class-tribe" and "class-nation." As away of consolidating their power, rulers recruit specific tribemembers for government job s, without concern for their qualifi-cations. In the conservative states, this is a com mon practice andthe rulers are not apologetic about it. They do, however, recruitprofessional and career-oriented personnel to run business andgovemment affairs behind the scene. In the self-declared socialiststates, the rulers, almost exclusively, rely on their relatives infilling out positions for various jobs and ranks (e.g., ministers,security and army leaders, top and middle-level managers of stateenterprises).The peculiarity of the tribal-family aspect of govemment isthat conservative and self-declared socialist regimes alike use the


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M A N A G E M E N T T H E O R Y IN A T R A N S T T I O N A L S O C I E T Y 19

public sector as a training ground for members of their clans toacquire new skills and knowledge. This has resulted in the cre-ation of the foundation of a class-tribe and of the institutionaliz-ing of it as a system.The new political class-tribe seeks to capture the economicpower of an established social class (e.g., the commercial orindustrial class). A typical way to achieve this is the wholesalereplacement of the old social class w ith a new class-tribe. (Notethat the new class-tribe has neither the educational and occupa-tional background nor the temperamental disposition for manage-rial tasks.) Ethnic groups (e.g., Kurds, Shiites, etc.) havetraditionally been dominant forces in both the commercial andfinancial sectors, particularly in the eastem part of the Arabworld. Contemporary governments have tended to expel themfrom the country or to bar them fiom activity in a particulareconomic sector, turning their properties and companies over tothe favored members of the ruling tribe. Furthermore, lucrativenew business ventures have been given to members of the tribe.Non-tribal entrepreneurs, in order to win govemment contracts,secure capital for new ventures, or gain entry into new m arkets,are forced to give up a share in their business or bribe somemembers of the class-tribe. This tribalism is a serious drawbackto the development of human resources. It denies the developingstate access to the rich sources of management talent not associ-ated with the favored tribe.Some Arab regimes have been successful in extending theconcept of the class-tribe to the class-nation as the new class-tribe assumes supremacy over the entire country. The wealth ofthe state is treated as the wealth of the new class-tribe, and thegoals of the class-tribe become those of the state. The rest of thepeople exist to obey and perform according to the wish of theruling tribe. Such a political climate is obviously detrimental tothe development of management thought. Members of the class-nation are suspicious of professional judgm ents. Original think-ing and creativity are condemned, and submissiveness andobedience are rew arded. M anagers, researehers, technicians, and


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the like are not allowed to voice their concerns or suggestionseven within established channels (Jasim , 1987a).Various factors ha ve contributed to this phenome non: insecur-ity of the ruling class, tribal solidarity, sudden increases in oilrevenu e, and the tolerance of world opinion. In this environm ent,

the role of resident management writers, economists, historians,poets, and other intellectuals is reduced to that of sycophant. Acase in point is a management writer, Al-Gharari, who wrote abook on m anagement in 1988. In the introduction to his book, hebegged the ruler for forgiveness because he wrote about a subjectthat is known only to the ruler. He wrote, "To a great leader, theglory of our forefather, the banner of nobility, the undefeatedsword. 1 ask your forgiveness if I have impinged up on you r intel-lectual horizon." In most Arab states, the intellectuals, rather thanengaging in serious research and building sound theories, spendtheir time w riting about imaginary attributes and achievements ofthe ruling class-nation.Recent trends in management thinkingThe preceding discussion provides insight into the complexworld of Arab management. Many forces have impeded and con-tinue to impede the progress of management and organizationdevelopment. These forces have individual and interactive ef-fects. It is difficult to isolate each influence clearly and precisely.Nevertheless, their cumulative effects can be detected at themicro and macro levels.

At the micro level, the Arab individual is suffering, in general,from a problem of duality in thinking and practice (Ali, 1988a;Ham ady, 1960; Jasim , 1987b). El-Tayeb (1986) observed that thephenomeno n of duality is apparent in the Ar abs ' love to invest inthe mod em sector just for the sake of being called m odem , and toinvest simultaneously in the traditional sector in order to main-tain it and revive those values that have perished (e.g., usingMajlis or open house to hear subjects' requests and solve theirproblems outside the formal organizational channels) in the name


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MANAGEM ENT THEORY IN A TRANSITIONAL SOCIETY 21

of "original." The Arab individual takes pride in front of strang-ers in being liberal and not religious , but manifests a traditionalattitude in front of others and recite verses from the Q uran or theProphet's sayings to accent that behavior. Likewise, the Arabsdisplay an infatuation with ideal forms, even when they knowthese forms to be contradicted by reality. To Westem observers,it is incomprehensible, but for the A rab it is a normal way of life.The simultaneously contradictory patterns of behavior Arab indi-viduals display (e.g., love-hate, pride-self-condemnation, indi-vidualism-conformism, friendship-hostility) are judged in theArab environment as natural and healthy (Hamady, 1960).In an organizational setting, this extreme behavior is translatedinto completely different pattem s. In a democratic environment,an Arab is characterized as being aggressive, a risk-taker, coura-geous, and creative, but in an authoritarian environment, he isdependent, apathetic, conformist, conservative, and refrains fromdebate and discussion. At the macro level, the influence of theseforces is exemplified by (1) establishing a huge number of ad-ministrative laws and regulations while no attempt is made toimplement themthey are just signs of modem ity; (2) designingsystems for selecting and promotion according to qualificationand merit, but hiring and rewarding according to social ties andpersonal relations; (3) setting up organizational structures anddesigns that remain as decoration, while abiding by them only onan exceptional basis (El-Tayeb, 1986). This has prevented anyserious attempts to set a certain tradition of management profes-sionalism in som e A rab states, and it has contributed to a lack ofbasic institutions necessary for sound management theory andpractice (Al-Saigh, 1986).Yet some progress (on a limited basis) has taken place invarious part of the Arab world. Different groups have contributedto such progress. Chief among them are Westem consultants andArab scholars educated abroad. Westem consultants, though,have on many occasions failed to make appropriate adjustmentsin their models w hen applying them to A rab culture (Roy, 1977);still, they have made a remarkable contribution in improving


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planning capacity and peiformance in production, control, andother technically related areas (Nor-A llah, 1978; Roy, 1975). ForArab scholars, the problem is that there is a concentration onhasty and unplanned copy ing of Western administration theories,irrespective of their cultural limitations (Al-Saigh, 1986). Fur-thermore, Arab graduates of Western and Arab higher educationinstitutions, are quite often not inclined toward professional re-search. Usually they stop engaging in theoretical or empiricalstudies after graduation.Nonetheless, som e gain in scholarship activities has occurred.Arab scholars in the field of management, despite the scarcity ofstudies, can be classified in three groups: Westernized, "Arab-ized," and "Islamicized."The Westernized group attempts to analyze and develop man-agement in the area, adopting modes of Westem thinking andpractice. Two approaches are adopted: environmental and behav-ioral.The environmental approach attempts to shed light on the en-vironmental factors that influence managerial thought throughpolitical, economic, legal, social, and religious practices. V ariousauthors have contributed to the advancement of this approach(Abd-Al-Khaliq, 1984; Al-Araji, 1980, 1983a, 1983b,; Al-Kubaisy, 1972; Al-Maney, 1979,1981; Ayubi, 1988; Badran andHinihgs, 1981; Zahra, 1986). This approach has been successfulin identifying various factors related to m anagement in the Arabworld, but it falls short of developing the hypotheses and as-sumptions necessary to test and build sound m anagement theory.Furthermore, environmental scholars treat individual organiza-tions as passive agents of the extemal environment (Negandhi,1983). They have not gone much beyond the identification ofthose factors that infiuence Arab managerial thinldng, and theyhave generally adopted investigative techniques and m odels thatmimic Westem studies.The behav ioral approach, on the other hand, attempts to studythe behavior of individuals and groups within the market and theworkplace. Issues of motivation, values, beliefs, decision style s.


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and other behavioral variables have been investigated. Behavior-ists, psychologists, and political scientists have had some suc-cess in clarifying behavioral and attitudinal dimensions longneglected in the Arab world. Several scholars have contributedto the increasingly important role of the behavioral school(Ajami, 1979, 1980; Al-Hegelan and Palmer, 1985; Ali, 1984,1986b, 1986c, 1987b; Al-Nimir and Palmer, 1982; Badawy,1980; Muna, 1980). These authors have found that organiza-tional and personal background affect managerial attitudes, val-ues, and beliefs; and that, although Arab managers are far fromhomogenous in their orientations, it does appear that m ost Arabmanagers share some basic values that refiect Islamic and tribaltraditions.Recentiy, more concerted attempts have been made to advancethe analytical and critical analysis of management practices.These new attempts establish a foundation for developing man-agement theory relevant to Arab culture. Ali (1987a, 1988a, b)and other researchers (Al-Kubaisy, 1985; El-Fathaly, 1985) offersuch conceptual and critical investigations. These endeavors, al-though a step in the right direction, tend to rely heavily on West-em orientations while attempting to "Arabize" theory. Theorybuilding and testing, however, can be enhanced through coopera-tive efforts among scholars from different fields (e.g., sociology,psychology, and public policy) across the Arab world. Further-more, the "A rabized" group needs to be m ore critical and innova-tive so as to sensitize managers to the deficiencies in currentsystems.The Islamicized approach (using Islamic principles and tradi-tion in conducting business affairs) has fiourished, to some ex-tent, in the last two decades for the following reasons. First, therehas been dissatisfaction among a large segment of the populationwith the Westemization process. Corruption, abuse of power,weakening family ties, and subscription to materialistic valueshave been attributed to the impact of the West. Secondly, theIranian Islamic Revolution has revived an old interest amongsome Arabs in establishing an Islamic state and in managing


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affairs accordingly. Below is a brief description of some of itsadvocates' orientations.Nusair (1983) compared Islamic motivation to contemporarymodels of human needs (e.g., Argyris, Herzberg, Maslow) andconcluded that all these models lack one thing in comm on: spiri-

tual needs. His normative model has three categories of needs:physiological, intellectual, and spiritual. He suggests that spiri-tual needs represent a safety valve against frastration, crisis, fail-ure, etc., and that a balance among the three major needs ispossible in the Islamic state.Khadra (1985) presented a norm ative model of leadership, thatof the Prophetic Leader. He contrasted this model with the Ca-liphal model of leadership, wbich he claims to be currently p rac-ticed in some Arab states. He suggests that the Arabs need a"great man," a man with some sort of "miracle" to lead them totheir ideals. People iinder prophetic leaders would strive to per-

form their duties to their best because they are motivated by theirlove and free submission to the leader.Hawi (1982) described the qualides of the Islamic leader asknowledgeable, mentally stable, courageous, generous, wise, incontrol of his temper, forgiving, caring, sensitive, abiding byprom ises, honest, assertive, hum ble, alert, sincere, patient, cheer-ful, not hasty in making decisions, receptive and willing to giveadvices, attentive, a good organizer, rewarding, respectable in hisappearance, and appreciative. Hawi suggests that social, eco-nomic, and political justice can be realized only voider Islamicrules, and that the welfare of society w ould be improved consid-erably if Islamic principles were applied.Abu-Sin (1981) provided a relatively more coherent prescrip-tive approach to Islamic administrative theory. He argues thatIslamic administrative theory: (1) reflects the social philosophyof the Islamic system; (2) recognizes economic forces and theirimpact on individuals and organizations, and that individuals'physiological needs must be satisfied to achieve organizationalgoals; (3) recognizes the importance of achieving a balance be-tween the spiritual and psychological needs of individuals; and


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MANAGEMENT THEORY IN A TRANSmONAL SOCIETY 25

(4) is based on the principles of hierarchical relationships, strac-tuiing of organization, planning of work, and obedience to formalauthority.Sharfiiddin (1987) attempted to identify the principles of Is-lamic theory of administration. He refers to the Quran and the

Prophet Moham med's teachings and practice to refine basic prin-ciples of administration. He indicated that the Islamic theory oforganization shares some similarities with the systems approachand bureaucracy. It resembles the systems approach in that itviews adm inistration as a subsystem that must reflect the valuesand objectives of the larger social system and must be responsiveto its needs. It is similar to bureaucracy in that it advocates theclarification of roles, the chain of command, hierarchical rela-tions, unity of comm and, obedience and compliance with formalauthority, and the development of skillful employees throughtraining. However, he argued that Islamic theory of organizationdiffers from the two approaches by integrating the socioeco-nomic needs ofth e employees with their humanistic and spiritualneeds.

The above groups have made little contribution to furtheringour understanding of m anagement and organization reality in theArab world. Nevertheless, in their attempt to simplify matters,researchers point to tribalism as an issue critical to Arab m anage-ment thought. Tribalism (Sheikdom) is integrated into both polit-ical and economic systems. Despite political constraints, businessorganizations across Arab nations, from Morocco to Iraq, haveflourished. These organizations capitalize upon three importantpillars of tribalism: individual, family, and tribe. Several success-ful examples were formed around strong individual will and/orfamily-tribe networks, such as Osman enterprises (Egypt); Al-Asad and Al-Harriri (Lebanon); Ibin-Binhuha, Kubha, and Al-Damarchi (Iraq); Alghanim, Al-Behbahani, and Al-Marzoukh(Kuwait); Al-Futtaim, and Galadaris (United Arab Emirates);Fakhroo, Algosuibi, and Kanoo (Bahrain); Al-Ghanem and Al-Khouri (Qatar); Algosuibi, Alireza, Kamel, Musellem, Pharoan,and Olayan (Saudi Arabia). These organizations have shown re-


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markable endurance during political and econo mic instability andtheir continuing growth evidences that they are well manag ed.To enhance the development of m anagement and organizationtheory in the Arab world, researchers should identify the princi-ples upon which these organizations are built, the role of thefounders/leaders, and the forces that shape and maintain theirsurvival and growth. Many Arab researchers believe that Arabsociety has a unique and peculiar culture. K we assume this istrue, then the agenda for future research is to identify the basicassumptions and beliefs that gov em Arab business organizationsand contrast these beliefs with that of Westem types of organiza-tion (North American and socialist-comm unist m odels).

The North American model has been dominated by the beliefthat managers exist to serve the stockholders. Managers areagents of the owner, and the organization exists to generatewealth for the owners of capital. In the socialist and communistmodels, on the other hand, management exists to serve the inter-ests of the state and the ruling party. In the A rab world, tribalismis rooted in economic, social, and political life. Managers andorganizations exist to further the interests of a collective group(individual, family, and layers of tribal ne twork). The sophistica-tion and complexity of this phenomenon have not been matchedwith a comparable management theory. While model develop-ment is beyond the scope of this paper, it is possible to suggestthat future studies could benefit from refining the "sheikocracy"model and that of Khadra's model of leadership. Both modelshave the potential to enhance and enrich the conceptual de velop-ment of organization and managem ent theory. O rganizational el-ements appropriate to conceptual development are consultationand egalitarian approaches, flat structure, patemalistic type ofcentral authority, intuition, open-door policy, compassion andpersonalized relationships, avoidance of strict rules, direct per-sonal orders, and public criticism, verbal appraisal, and inner-group goal setting.In general, it can be said that the study of Arab managerialthought is still in its infancy. Only recently have serious attempts


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MANAGEM ENT THEORY IN A TRANSTTIONAL SOCIETY 27

been made to identify and analyze components of A rab manage-ment and organization. It is obvious, as Jasim (1987b) argues,that there is a crisis in the Arab world in ideology, and in politi-cal, social, and econom ic systems. This crisis, which has left itsimpact on individuals and o rganizations, is preventing the naturalevolution of sound management thinldng. It is possible, there-fore, to suggest that Arab m anagement thinking has not advancedto the point that it is possible to analyze accurately A rab manag e-ment practice and to develop models for explaining organiza-tional environment. Some new events are taking place in theinternational arena that may have an influence on tiiat manage-ment and organization environment in the future. This will bediscussed in the following section.Arab perestroika and management

The profound change that has transformed the political situationin the Soviet Union and Eastem Europe in 1989-90 may inducenew and significant changes in the Arab world. Westem observ-ers are optimistic that such changes can lead to immediate liber-alization and freedom (see Axelgard , 1989; Moffett andFriedman, 1990). These observers, however, ignore basic aspectsof the reality of Arab politics: the personalized aspects of author-ity, tribalism, and fluidity, and alternating fission and fusion ofgroup coalitions and alliances. These aspects are capable of con-taining or slowing down the march toward dem ocracy in the ageof freedom. To delay and/or encounter the quest for freedom anddemocracy, the Arab regimes have launched two strategies at thestate and regional levels. At the state level, the self-claimed so-cialist states have responded with various programs: privatizingstate enterprises, encouraging private investment, relaxing tradebarriers. In addition, these regimes have started to debate themerit of multi-party political systems. The conservative regimesof the Gulf point to God's blessing of stability, munificence oftheir rulers, and to the validity of their systems; the events inEastem Europe demonstrate that the socialist and communist ide -


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MANAGEMEm' THEORY IN A TRANSITIONAL SOCIETY 29

prevent the process of democracy. Evidence across the Arabstates indicates that existing regimes do not believe in free elec-tions because they may be viewed as an acknowledgment of theirillegitimacy. The events in Eastern Europe call into question thelegitimacy of Arab governments and challenge its religious andpolitical justification.The second vital concern is related to the scope of liberaliza-tion or reform process. The Arab states in the last twenty yearshave undergone dram atic political, social, and economic changes.During the 1950s and 1960s, the Arab nationalist movement wasstrong, and one could speak of the Arab identity and the Arabpersonality. Subsequently, Arab intellectuals and activists devel-oped economic and social programs that were heavily influencedby socialist principles. President N asser of Egypt was the hero ofpan-Arabism and when he nationalized foreign and major Egy p-tian corporations in 1961, other regimes, with some variations,followed suit. Arab goals of unity, freedom, and progress, how-ever, faded after the death of its champion (Nasser) and after thedramatic increase in oil prices. The influence of the pan-Arabmovement weakened, and, instead, attachment to the nation-stateemerged as the dominant force. This has induced Fouad Ajami(1978/79) and Oded Yinon (1982), an Israeli strategist, to talkabout the demise of pan-Arabism . Yinon states:

The Moslem Arab World is built like a temporary house of cards puttogether by foreigners (F rance and Britain in the Nineteen Twe nties),without the wishes and desires of the inhabitants having been takeninto account It was arbitrarily divided into 19 states, all made ofcombinations of minorities and ethnic groups which are hostile toone another, so that every Arab Moslem state nowadays faces ethnicsocial destruction from within and in some a civil war is alreadyraging. (1982, p . 32 )

I believe, however, that pan-Arabism is not dead; it has justsuffered major setbacks. The movement is still facing formidableforces: interests of the ruling elites of each state in maintaining


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3 0 A B B A S J. A U (USA)the Status quo, tribal and sectarian division in the Arab world,absence of national leaders who can capture the mind and rallythe public around nationalistic goals, and mostly the Israe li chal-lenge to Arab unity. The last force is extremely important, sinceIsrael has the strategic and technical capacity to prevent th e real-ization of such goals. Israel Shahak (1982) unfolds the Israeliplan for the Arab w orld. He states:

The idea that all the Arab states should be broken down, by Israel,into small units, occurs again and again in Israeli strategic thinldng.For example, Zeev Shiff, the military correspondent of Ha'aretz (andprobably the most knowledgeable in Israel, on this topic) writesabout the "best" that can happen for Israeli interests in Iraq: "Thedissolution of Iraq into a Shiite state, a Sunni state and the separationof theKurdish parL"

Evidence indicates that pan-Arabism has the po tential to be themajor driving force for Arab liberalization and for Arab statestrategic cooperation and /or unity. These indicators are as fo llows.(1) The rise of Islamic movements in almost all Arab states: thenew Islamic movement, unlike the ones that flourished in the1940s and 1950s, places emphasis on Arab dimension and iden-tity. Furthermore, its programs contain some economic and socialperspective for the future state. (2) The failure of Arab regimes(and especially the ruling political organizations, e.g., Bath So-cialist in Iraq and Syria, Algeria's National Liberation Front) andthe conservative regimes to develop and grow beyond a sectarianand tribal mentality induce the public to look for viable alterna-tives for solving social and economic problems. (3) Arab unityinstitutions are flourishing across the Arab states (e.g.. Center forArab U nity Study, Center For Nationalism Grow th). (4) National-istic thinkers have shown a new and significant level of maturityand realism in their approaches (e.g., Al-Jabri, Morocco;Bennoune, Algeria; Syed Yasin, Egypt; Syed Jasim, Iraq; Marqus,Syria; Al-Khatuib, Kuw ait). (5) The conservative elites w ho, untilrecently, were preoccupied with a narrow interest of the new na-


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M A N A G E M E N T T H E O R Y I N A T R A N S T T I O N A L S O C I E T Y 31

tion-state show a modest interest in Arab unity. For example, AliLatafi (former prime minister of Egypt) and Mohammed Al-Mulla (secretary general for the Arab Gulf Chamber of Com-merce) indicated in an interview with Al-Hawadeth magazine(1990 a, b) that the process for Arab unity should be accelerated.(6) And finally, many Arab investors and entrepreneurs havefound it more profitable to establish their industrial bases in theirhome states and in other parts of the Arab world. Businessmenand their professional organizations are exerting influence on theArab governments to lift tariffs on Arab products and capitalmovement across the region. This new pragmatism and reaUsmamong Arab managers and entrepreneurs could be critical for eco-nomic unity and integration.Regardless of the direction and nature of the Arab liberationmovement (pan-Arabism vs. nation-state), the Arab states aredestined, like the rest of the world, for changes. This poses thefollowing questions. What is the future direction of economicreform? And what is the dominant vision that would shape eco-nomic systems and organizations? Two schools of thought areidentifiable. The first assumes that Islamic movements are theonly forces able to topple the existing regimes and are the onlywinners of the liberalization p rocess. The com mitment of Islamicforces to democratic practices is uncertain. One expects, never-theless, an Islamic form of organization to be dominant. Many ofthe Islamic leaders, however, have no realistic world vision andare out of touch with reality. Since the Arab people have beenvictims of oppression and arbitrary use of power, they are notlikely to settle for anything but freedom and democracy. Unlessthe Islamic forces develop programs that tolerate diversity inbeliefs and outlooks, and are willing to cooperate with otherforces on a democratic basis, their chances of meeting the ch al-lenges ahead are negligible.The second school advances that the Arab region is a comfort-able place for moderation. This is a realistic view and is based onthe assumption that the region has witnessed economic crises anddevastating wars that resulted in a high level of unemployment


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and inflation, economic stagnation, corruption, and human suffer-ing and dissatisfaction. Domestic pressures along with a growingtrend toward freedom in the world open the door for a multi-partydemocratic system and for a type of market economy with limitedstate intervention. An era of freedom would allow the Arab peopleto assume their vital role in the intemational arena and to enrichtheir cultural contribution to world civilization.Arab business organizations are expected to m irror changes insociety. As agents of change, new managers would be sensitiveto the challenges they face at the organizational and societallevels. A new envirormient of political pluralism, along withfreedom of expression and respect for human dignity, shouldmotivate m anagers to use their talents and enhance their attitudestoward risk-taking. Intuition and courage, flexibility and toler-ance, compassion and honesty, loyalty and commitment to goalswere cherished by the Arabs during medieval times and wouldflourish again in the age of freedom. Managers in the comingyears would be humanistic in their approaches and hopeful thatthe future is for those who are actively involved in econom ic andsocial changes. In conducting their organizations' affairs, theywould value goal setting, consultative/participative decisionmaking, and the contributions of employees. The role of the fa-ther figure, at the top of the organization, would take on newmeaning, sustaining group cohesiveness in line with society'sneeds.ReferencesAbd-Al-Khaliq, N. (1984) "Al-Abaad AI-Biyha Le-albureaucrata Al-Kuwaita" [Environmental Dimensions of Bureaucracy in Kuwait]. Studiesin the Gulf and Arab Island, 10 (38), pp . 13-65.Abu-Sin, A. (1981) Al-adarha A l-aislsmha [Islamic Administration]. Dubai:The Contemporary Press.Ajami, F. (1978/79) "The End of Pan-Arabism." Foreign A ffairs (Winter),355-373.Ajami, R. (1979) Arab Response to Multinational.New York: Praeger.. (1980) "Determinants of Attitudes toward Multinational Firms: HostAiah Society Elit&s."StrategicMaruigement Journal, l .pp. 193-208.


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310.Al-Gharari, H. (1988). A l-FakrAl-A dari Ind A l-KaidSadumH ussien [Manage-ment Thought of Sadum Hussien]. Baghdad: Dar Al-Thugafia.A l-H awadeth. (1990a). "Interview with Ali Latafi." (March 30), pp. 44-47.. (1990 b). "Interview w ith Moham med A l-Mulla." (April 13), p. 44 .Al-Hegelan, A., and Palmer, M. (1985) "Bureaucracy and Development inSaudi Arabia." M iddle E asUrn Journal, 39 (Winter), pp. 48- 59 .Al-Kubaisy, A. (1972) "Theory and Practice of Administrative Developmentin a New Nation." Dissertation Abstracts International, A 32,5873-A.

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Amm an, Jordan: Arab Organization of Administrative Sc iences, pp. 13 -43 .Ali, A. (1984) "Political Ideology and Social Class." International Social Sci-ence R eview, 59 (3) , pp . 162-170 .. (1986a) "Human Resource Problems and Development in the Arab

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Muna, F. (1980) The Arab Executive. New York: St M artin's Press.Negandhi, A. (1983) "Cross-Cultural Management Research: Trends and Fu-ture Directions." Journal of Intemational Business Studies (Fall), pp. 17-28 .NorAllah, K. (1978) "Economic, Social, and Management Developments inthe Arab World."Arab Future, 11 (4), pp. 96-114.Nusair, N. (1983). "Human Nature and Motivation in Islam." Islamic Quar-terly, 29 (3), pp. 148-164.Roy, D. (1975). "Development Administration in the Arab Middle East" In -temational Review of Administrative Sciences, 2 , pp . 135-148.. (1977), "Management Education and Training in the Arab World."Intemational Review ofAdministrative Sciences, 43 (3), pp. 221-22 8.Shahak, I. (1982). The Zionist Plan for the Middle East. Behnont, MA : Associ-ation of Arab-Amoican University Graduates, Inc.Sharfuddin, I. (1987). "Toward an Islamic A dminisirative Theory." The Ameri-can Journal of Islamic Social Science, 4 (2), pp . 229-244.Yinon, O. (1982). "A Strategy for Israel in the Nineteen Eighties." In IsraelShahak (ed.). The Z ionist Plan for the Middle East. Belmont, MA: Associa-tion of Arab-Am erican University Graduates, Inc.Zahra, S. (1980). "Egyptian Management at the Crossroads." ManagementIntemational Review, 20 (3), pp. 118-124.


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