Int. Studies ofMgt. & Org.. Vol. 20, No. 3, pp. 7-35.

M. E. Sharpe, Inc., 1990.

ABBAS

J. Au(USA)

Management Theory in a Transitional Society: the Arab's Experience

Introduction Students of international comparative management have long recognized the impact of industrialization on developing nations. They detect that, in their quest for economic progress, the developing countries would face managerial and social problems. In the context of management, two issues stand out: the transfer of Western management techniques and practices, and the selection of appropriate models to achieve ambitious developmental goals. Among the developing nations, the Arab states provide a unique setting for social-science analysis and study, due to the complexity, direction, and rate of changes. Oil-based wealth has changed Arab societies, but its effects have not yet been sufficiently scrutinized (Ibrahim, 1982). The discovery of oil and the dramatic increases in oil revenue after 1973, while solving some of the economic problems of the Arab countries, created a totally new set of social problems (e.g., abrupt change in societal structure and lifestyle). The latter are
The author is Professor of Comparative Management and Business Policy at Indiana University of Pennsylvania, Indiana, PA. He wishes to thank Professors Robert C. Camp and Paul Swiercz for their comments on an earlier version of this article.

ABBAS J. AU (USA)

more difficult to deal with as they are often unforeseen, almost without precedent, and therefore cannot be solved by example (Kay, 1982). More complex still are the problems associated with the declining oil prices after 1982, and flie uncertainty surrounding prices since that time. Economic, social, and political expectations of groups and individuals are constantly changing. As such, changes in group alliances, priorities, ideologies, motivation, and values become the norm (Aii, 1988a). This paper takes the position that Arab management thought is fragmented and suffering from a crisis in direction and identity. The objective is to shed light on the forces that shape and impede the evolution of management theory and practice in the Arab world. Economic instability and turmoil, and the ever-changing sociopolitical environment in the area, have had tremendous influence pn managerial perceptions and behaviors. Managers are increasingly unable to meet the demands of conflicting forces (e.g., political elites, tribal networks, employees, stockholders). Current managerial thinking and practices can be best understood in the context of ongoing struggle between old and new social classes, between the forces of change and the forces of stability. It is within the context of this fluidity and fragmentation of the Arab world, and of continuing rivalry among various interest groups, that one can comprehend the culture of management in the Arab world. Historical influences on Arab mangement thought Berque (1970) argues that for over fourteen centuries, an immense layer of thought, behavior, and work has had a major impact on Arab individuals. The impact, however, has produced different reactions and behavior at various times and in different situations. This means that various historical factors have influenced modem Arab management practices. These factors tend to reinforce each other and to color approaches for management differentiy, depending upon the forces they exert in various regions or states. Five factors appear to be particularly significant.

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They are: (a) Isalmic influence, (b) tribal and family traditions, (c) die legacy of colonial bureaucracies and the Ottoman Empire (1412-1918), (d) increasing contact with Westem nations in recent decades, leading to increased pragmatism, and (e) government intervention and political constraints. These five factors will be discussed briefly. The influence of Islam It is fair to suggest that many Arab management practices are rooted in the Islamic and pre-Islamic empires. The ancient Sumerians, for example, recognized the need for better control of their resources, and developed the first reporting procedures. The Egyptians made tremendous strides in organizing physical and human resources in the construction of the pyramids and other vast architectural projects. During the first six centuries of Islam (since the sixth century), knowledge, trade, industry, agriculture, and construction of complex organizations flourished. Work and creativity were honored in all their forms. Quranic principles and prophetic prescriptions served as guides for Muslims in conducting their business and family affairs. Izeeddin (1953: 30-31) examined the contributions of the Arabs to organized work, noting
that: The industries and trades were organized in corporations or guilds. These corporations were of great social importance. They maintained the standard of craftsmanship and prevented underhand competition, thereby insuring a friendly society. Based on religious and moral foundations, they impressed upon their members a sense of duty toward one craft and toward one another. Honesty and sobriety were characteristic qualities of Moslem artisans. A tradition of mutual aid prevailed. Notwithstanding differences among the members in wealth and rank, social solidarity and social duty were emphasized, and the humblest member was assured a place in the social order. Current management thinking and practices continue to be influenced by various Islamic schools of thought. Aii (1964), in an

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effort to bring order to this vast body, of experience, divides Islamic thought into six schools. Since there is no separation between state and religion in Islam, these schools have had a profound influence on various political and economic structures in Islamic and Arab states. The first, Jabria, emphasizes compulsion or predestination. This school asserts that man is not responsible for his actions, and that tradition must take precedence over the power of choice. It relies on clearly defined rules and complete obedience to authority. For this school, a man does not need to use rational arguments, but only to follow and accept the leader's instructions. An extreme version of this school, called Sifatias (attributes), asserts that man has no power, knowledge, or free will. It adheres strictly to the doctrine of predestination in all its gloominess and intensity. The role of the absolute leader who has answers to everything and provides rewards or punishment is glorified. Organization and organizational work-group roles are subordinate to the role of the authority figure. The second school is the Tafwiz. This school emphasizes free wHl and unqualified discretion in the choice of wrong and right, because rules and regulations constrain human and organizational life. In the organizational context, there should be no clear sets of responsibilities and duties. Employees assume different tasks and duties, and collective responsibility is preferred. The third is the Ikhtiar school, which shares the Tafwiz emphasis on free choice, but differs in the beliefs about man's capacity to tum evil into good. Unlike the Tafwiz school, it stresses that man is at liberty to commit a good or bad deed, pain or joy, and that he is solely responsible for his actions. Man is believed to be a responsible social actor striving to work with the group and to achieve the group goals in harmonious and cooperative environment The Mutazilas, or the rationalistic school, believes that all knowledge must be attained through reason. This school holds that nothing is known to be wrong or right until reason has enlightened us to the distinction; and, further, that everything is liable to change or annihilation. As in the Ikhtiar school, the

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Mutazilas believe that performance is the criterion for reward and punishment. Man is capable of distinguishing between right and wrong. It maintains that free will and democracy are prerequisites to action and the prosperity of society. Denial of ability and free will stifles creativity and destroys the soul. The fifth school of thought, advocated by Ibn-Rushd (or Averroes, c. 1126 AD), holds that actions depend partly on free will and partly on extemal environmental forces that serve to restrain and/or determine individual and collective actions. The participative democratic process is thought to be the ideal organizational form, and autocracy is believed to open the door to himian misery. Furthermore, this school believes that perfection can only be attained by study and speculation, not by mere sterile meditation. In addition, women are considered equal in every capacity to men. The sixth and the final school, the Ikhwan-us-Sctfa (Brothers of Purity) arose in the tenth centuiy in response to the oppressive practices of the Jabria school. During the tenth century, liberalminded thinkers and philosophers were tortured and prosecuted. Nevertheless, a small body of thinkers formed themselves into a brotherhood to hinder the downward course of the Moslems toward ignorance and narrow-mindedness. They established secret organizations across the Islamic nation and used letters as a way to disseminate thought The school advocated rationalism, selfdiscipline, and self-control. Ikhwan-us-Safa believed that faith without work and knowing without practice were futile. They displayed a strong faith in man's ability to make progress and control the environment. Although this school contributed to setting high moral standards in commerce and politics, its main contribution was the belief that liberty of intellect is an essential precondition for a creative and healthy society. They believed that corruption and disorder are symptomatic of tyranny. The above schools had tremendous infiuence on the way in which states were organized and on the way business and personal transactions were conducted ia various parts of the Arab world. For example, the Ommayyad Empire (661-750) subscribed to the

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ABBAS J. ALI (USA)

Jabiia School, whereby centralization of. government affairs and strict adherence to specified rules were the norm. The rationalistic view, and the Ikhtiar or Mutazilas forms, prevailed diiring the enlighted Abbassid's Caliphs Mamun and Mutasim and in the Fadmide state. During tfie Fadmides era (969-1171), the power of the mind, the concept of liberty, and the role of knowledge were promulgated. The increasing influence of non-Arab elements in the Muslim world contributed to the gradual disappearance of this participative approach and to the solidification of traditional or authoritarian forms of govemmenL The defeat of the Arab Caliph and the ascendancy of the non-Arab Ottoman Empire (1412-1918) helped to institutionalize autocracy and furthered the demise of trade association and freely organized business activities in Arab lands. The Turks, historically, have looked upon their chiefs as the direct descendants of God; conversion to Islam did not erase this belief (Ali, 1964). Their adherence to the Jabria school and its associated fanaticism influenced the theological perspective of the Arabs during the Ottoman Empire. Just after the Arabs gained their independence in the twentieth century, they established similar authoritarian regimes in the new nation-state (e.g., Algeria, Iraq, Morocco, Saudi Arabia, Syria, Tunisia). Independent thinking, concepts of liberty, and power of mind were condemned, and Jabria principles were sanctioned in every aspect of life. The above schools, except the Jabria, have become part of history. Some of the newly established nation-states outlawed imagination and feared freedom and information. Single-minded thought is advanced to serve the goals of each regime. Arab governments, both the conservative and self-proclaimed radical, exploit the influence of Islam on the life of population. Religious figures (e.g., sheikhs or mullahs) have been recruited and appointed as mosque functionaries, teachers, and judges. They are given titles and lucrative salaries, and many have become paid employees of the state bureaucracy. They exist to legitimize and justify the power of unjust rulers. Their roles vary

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slightly from one state to another, but their function remains the same. In Saudi Arabia, they play very vital roles and have been integrated in daily functions of govemment (e.g., approving new laws, advising, and participating in official ceremonies). In Egypt and Iraq, on the other hand, their roles are highly regulated and the govemment makes sure they do not exceed their prescribed limits. The Quran (Holy Quran, 1981) contains many references to the conduct of business. For example, "Do not exchange your property in wrongful ways unless it is in trade by mutual agreement" (4:30); and "It is He Who has made the earth subservient to you. You walk through its vast valleys and eat of its sustenance" (67:15). Islam also has specific prescriptions regarding investments and the undesirabUity of preventing commodities from circulating, depriving the owner as well as the community of their benefits. For example: "Those who hoard gold and silver and do not spend for the causes of God, should know that their recompense will be a painful torment on the day of Judgment and that their treasures will be treated by the fire of Hell and pressed agaiast their foreheads, sides and back with this remark, 'These are your own treasures which you hoarded for yourselves. See for yourselves what they feel like.' " There is a contradiction between the ideal, as specified in the Quran and Prophet Mohammed's sayings, and reality in the Islamic Arab world. For example, interest charges on loans as well as bribes (money and gifts given or promised to a person in a position of influence to facilitate deals or change his or her conduct) are publicly acknowledged in most Arab states. On many occasions, in fact, business cannot be conducted without bribes being given. Islam, however, considers interests and bribes sinful. The majority of financial institutions in the region adopt the pre-determined rate of interest on loans. Muslim thinkers believe this is not Islamic. They suggest an interest-free banking system. The principle of this system is that profits and risk should be shared by both partners (lenders and borrowers) in the loan transaction (Boase, 1985). Likewise, bribery is a customary practice

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ABBAS J. AU (USA)

in the region, even though it was condemned by Prophet Mohammed, who said: "Those who offer and those who accept bribes are in helL" Another contradiction is related to the process of consultation. In conducting business and political affairs, true adherents of Islam present consultation among peers as religiously positive, as this statement from the Quran attests: "Reward will be for those who conduct their affairs with consultation among themselves." Rulers and religious leaders, however, have chosen to emphasize other 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 authority among you" (4:59). Thus, there is a high tension between participatory or consultative approaches, on the one hand, and authoritative approaches to management, on the other. Tribal and family traditions Tribal traditions sanction consultation in the condua of all aspects of life. It is the practice of tribal societies that members of the entire kinship network should be consulted on matters important to their collective welfare. However, the tribal mentality and rivalry among tribes also encourage authoritarian approaches to dealings with non-kin, such as other tribes or other segments of society. Arabs tend to develop intense loyalty to their own tribes or regional groups, but at this time do not appear to find it easy to develop mutually beneficial affiliations with larger entities, as sometimes was done during the early years of Islam. The Islamic tribal-family tradition that is termed sheikdom has been a major influence in this regard. Managers so influenced behave as fathers, i.e., as protectors, caregivers, and those who shoulder all the responsibilities of business. While the above characteristics are not necessarily negative (e.g., caring about the welfare of employees, and personalized subordinate relations), they do suggest an authoritarian management style.

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The authoritarian structure is particularly apparent in large organizations. Most Arab organizations, whether public or private, are highly centralized and adopt an authoritarian (functional type) structure, regardless of corporate strategy or technology. Islamic tribal-family traditions reinforce certain other values and norms as well, which center around what constitutes accepted behavior and ideas of right and wrong. The Islamic tribalfamily orientation induces supervisors to ascribe to what is termed "outer-directed" values, i.e., conformist and sociocentric, rather than democratic beliefs. The outer-directed manager, for example, tends to adapt to his or her situation in life and does not "rock the boat." Outer-directed managers tend to prefer structured situations and adherence to policies and group norms. Furthermore, outer-directed managers tend to prefer stable work environments and do not set goals or engage in innovative behavior. Instead, they implement someone else's plan. Managerial approaches to creativity and problem solving are also influenced by tribal perceptions. Teamwork and cooperation to achieve organizational goals are difficult to realize. The process of socialization in the family tribe environment does little to prepare individuals to work within groups outside the family and the tribe (Ali, 1988a; Ayoubi, 1986). There is always an attitude of "we" and "they." Any interest that does not belong to the inner group or tribe is considered secondary. Creativity and uniqueness in problem solving are not encouraged. Any approach that does not conform to acceptable norms is considered a threat to established authority and organization stability. There are numbers of public examples that demonstrate the consequences of tribalism. Li Iraq, for example, a confUct between two powerful senior managers in a state enterprise was solved by the creation of two companies headed by each of thema typical tribal practice of treating equally and pleasing favored rivals (sons or relatives). In Saudi Arabia and other Gulf states, employees in the public sector from powerful families are not required to report to work, they just receive monthly paychecks.

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ABBAS J. AU (USA)

The legacy of the Ottoman Empire and colonial bureaucracies The third major influence on Arab management styles is the bureaucratic legacy of colonial status (both Ottoman and European). Arab administration has remained captive of the bureaucratic structures and systems inherited from the long periods of occupation and colonization (El-Tayeb, 1986). The European colonists attempted to introduce efficiency and to improve indigenous skills for efficient operation of the civil service systems. The Ottoman Empire, however, demanded complete obedience and condemned creativity and independent thinking. Both of these influences are reflected in orientations that stress centralization of authority, rigid rules and regulations, division of labor, and low tolerance for ambiguity and autonomy. The colonial bureaucratic and Ottoman autocratic systems, and tribalism, gave rise to what can be termed "sheikocracy." This term is a modified version of what Abd-Al-Khaliq (1984) and other called "bedoucracy"solving contemporary problems by using traditional methods. According to Al-Kubaisy (1985), "sheikocracy" is a product of the interaction of bureaucratic and sheiko orientations and behaviors. He indicates that, due to industrialization and the introduction of modem organizations into the Arab world, managers have to adapt to new demands (e.g., clarification of authority and responsibility, efficiency, civil laws) while observing traditional values and norms (e.g., personal relations, preference for individuals from influential tribes, open-door policy). The chareicteristics of sheikocracy are: hierarchical authority, rules and regulations contingent on the personality and power of the individuals who make them, an "open door" policy, subordination of efficiency to human relations and personal connections, indecisiveness in decision making, informality aniong lower-level managers, and a generally patriarchal approach. Nepotism is often evident in selecting upper-level managers, but qualifications are emphasized in the selection of middle- and lower-level personnel. Chain of command, scalar

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principles, and division of labor are also characteristics of the sheikocracy. Western contacts and the growth of pragmatism The fourth major influence on Arab management is a more current one, and relates to the growing role of pragmatism in the area (Aii, 1987a). Oil revenues, a rising new middle class, and improved education, health care, communications, and mobility, in combination with increased interaction with industrial cultures, have strengthened the influence of pragmatic values and approaches. The pragmatic manager tends to be aware of the misuse and waste of organizational resources, and is sensitive to the image of his or her organization. This new perspective on management has been introduced, in a limited fashion, throughout different parts of the Arab world. Flexibility, a systems approach, acceptance of multiple roles as opposed to strict division of labor, and tolerance for ambiguity and diversity are slowly being incorporated into Arab managerial practices. Further exposure to Westem approaches, the increasing intemationalization of business, and the uncertainty surrounding the future of Arab economic development due to political and economic instability can be expected to lead to greater emphasis on pragmatic approaches to management among businessmen and enlighted elites. The task of pragmatic managers, however, is formidable. They face the resistance and doubt of the political rulers and of the conservative segments. Government intervention and political constraints A fifth and more recent major infiuence on managerial thinking and practices in the Arab world is govemment intervention and political constraints. The nature and role of govemment have changed since the late 1950s. Two factors have contributed to such changes: the rise of self-claimed socialist states in some parts of the Arab world (e.g., Algeria in 1962, Egypt in 1952,

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Iraq in 1958) and increasing oil revenue in some other states and the subsequent introduction of state planning (e.g., Saudi Arabia introduced its first development plan in 1970). Arab govemments, preoccupied with their own survival, often neglect the strategic importance of economic and human development. In the self-declared socialist states (Iraq, Libya, Syria), fearful govemments have hindered the development of indigenous managerial practices. Because of colonial influences, these states have historically enjoyed a relatively capable managerial class. However, as socialist governments took over, they recruited loyal political career party members and army officers to replace professional managers. The conservative states (e.g., Saudi Arabia, Kuwait, Qatar), on the other hand, have traditionally suffered from a lack of professional managers. As a result of oil discoveries and economic expansion, new opportunities were opened to the indigenous population to gain skills and to become involved in business activities. The last two decades (until the start of the Iraq-Iran War in 1981) witnessed govemment support for economic activities that furthered the development of independent managers. However, the Iraq-Iran War led to govemment intervention in business activities. The most destructive policy in the Arab world is related to what Ali (1986a) termed a "class-tribe" and "class-nation." As a way of consolidating their power, rulers recruit specific tribe members for government jobs, without concern for their qualifications. In the conservative states, this is a common practice and the rulers are not apologetic about it. They do, however, recruit professional and career-oriented personnel to run business and govemment affairs behind the scene. In the self-declared socialist states, the rulers, almost exclusively, rely on their relatives in filling out positions for various jobs and ranks (e.g., ministers, security and army leaders, top and middle-level managers of state enterprises). The peculiarity of the tribal-family aspect of govemment is that conservative and self-declared socialist regimes alike use the

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public sector as a training ground for members of their clans to acquire new skills and knowledge. This has resulted in the creation of the foundation of a class-tribe and of the institutionalizing of it as a system. The new political class-tribe seeks to capture the economic power of an established social class (e.g., the commercial or industrial class). A typical way to achieve this is the wholesale replacement of the old social class with a new class-tribe. (Note that the new class-tribe has neither the educational and occupational background nor the temperamental disposition for managerial tasks.) Ethnic groups (e.g., Kurds, Shiites, etc.) have traditionally been dominant forces in both the commercial and financial sectors, particularly in the eastem part of the Arab world. Contemporary governments have tended to expel them from the country or to bar them fiom activity in a particular economic sector, turning their properties and companies over to the favored members of the ruling tribe. Furthermore, lucrative new 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 markets, are forced to give up a share in their business or bribe some members of the class-tribe. This tribalism is a serious drawback to the development of human resources. It denies the developing state access to the rich sources of management talent not associated with the favored tribe. Some Arab regimes have been successful in extending the concept of the class-tribe to the class-nation as the new classtribe assumes supremacy over the entire country. The wealth of the state is treated as the wealth of the new class-tribe, and the goals of the class-tribe become those of the state. The rest of the people exist to obey and perform according to the wish of the ruling tribe. Such a political climate is obviously detrimental to the development of management thought. Members of the classnation are suspicious of professional judgments. Original thinking and creativity are condemned, and submissiveness and obedience are rewarded. Managers, researehers, technicians, and

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the like are not allowed to voice their concerns or suggestions even within established channels (Jasim, 1987a). Various factors have contributed to this phenomenon: insecurity of the ruling class, tribal solidarity, sudden increases in oil revenue, and the tolerance of world opinion. In this environment, the role of resident management writers, economists, historians, poets, and other intellectuals is reduced to that of sycophant. A case in point is a management writer, Al-Gharari, who wrote a book on management in 1988. In the introduction to his book, he begged the ruler for forgiveness because he wrote about a subject that is known only to the ruler. He wrote, "To a great leader, the glory of our forefather, the banner of nobility, the undefeated sword. 1 ask your forgiveness if I have impinged upon your intellectual horizon." In most Arab states, the intellectuals, rather than engaging in serious research and building sound theories, spend their time writing about imaginary attributes and achievements of the ruling class-nation. Recent trends in management thinking The preceding discussion provides insight into the complex world of Arab management. Many forces have impeded and continue to impede the progress of management and organization development. These forces have individual and interactive effects. It is difficult to isolate each influence clearly and precisely. Nevertheless, their cumulative effects can be detected at the micro 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; Hamady, 1960; Jasim, 1987b). El-Tayeb (1986) observed that the phenomenon of duality is apparent in the Arabs' love to invest in the modem sector just for the sake of being called modem, and to invest simultaneously in the traditional sector in order to maintain it and revive those values that have perished (e.g., using Majlis or open house to hear subjects' requests and solve their problems outside the formal organizational channels) in the name

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21

of "original." The Arab individual takes pride in front of strangers in being liberal and not religious, but manifests a traditional attitude in front of others and recite verses from the Quran or the Prophet's sayings to accent that behavior. Likewise, the Arabs display an infatuation with ideal forms, even when they know these forms to be contradicted by reality. To Westem observers, it is incomprehensible, but for the Arab it is a normal way of life. The simultaneously contradictory patterns of behavior Arab individuals display (e.g., love-hate, pride-self-condemnation, individualism-conformism, friendship-hostility) are judged in the Arab environment as natural and healthy (Hamady, 1960). In an organizational setting, this extreme behavior is translated into completely different pattems. In a democratic environment, an Arab is characterized as being aggressive, a risk-taker, courageous, and creative, but in an authoritarian environment, he is dependent, apathetic, conformist, conservative, and refrains from debate and discussion. At the macro level, the influence of these forces is exemplified by (1) establishing a huge number of administrative laws and regulations while no attempt is made to implement themthey are just signs of modemity; (2) designing systems for selecting and promotion according to qualification and merit, but hiring and rewarding according to social ties and personal relations; (3) setting up organizational structures and designs that remain as decoration, while abiding by them only on an exceptional basis (El-Tayeb, 1986). This has prevented any serious attempts to set a certain tradition of management professionalism in some Arab states, and it has contributed to a lack of basic institutions necessary for sound management theory and practice (Al-Saigh, 1986). Yet some progress (on a limited basis) has taken place in various part of the Arab world. Different groups have contributed to such progress. Chief among them are Westem consultants and Arab scholars educated abroad. Westem consultants, though, have on many occasions failed to make appropriate adjustments in their models when applying them to Arab culture (Roy, 1977); still, they have made a remarkable contribution in improving

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planning capacity and peiformance in production, control, and other technically related areas (Nor-Allah, 1978; Roy, 1975). For Arab scholars, the problem is that there is a concentration on hasty and unplanned copying of Western administration theories, irrespective of their cultural limitations (Al-Saigh, 1986). Furthermore, Arab graduates of Western and Arab higher education institutions, are quite often not inclined toward professional research. Usually they stop engaging in theoretical or empirical studies after graduation. Nonetheless, some gain in scholarship activities has occurred. Arab scholars in the field of management, despite the scarcity of studies, can be classified in three groups: Westernized, "Arabized," and "Islamicized." The Westernized group attempts to analyze and develop management in the area, adopting modes of Westem thinking and practice. Two approaches are adopted: environmental and behavioral. The environmental approach attempts to shed light on the environmental factors that influence managerial thought through political, economic, legal, social, and religious practices. Various authors have contributed to the advancement of this approach (Abd-Al-Khaliq, 1984; Al-Araji, 1980, 1983a, 1983b,; AlKubaisy, 1972; Al-Maney, 1979,1981; Ayubi, 1988; Badran and Hinihgs, 1981; Zahra, 1986). This approach has been successful in identifying various factors related to management in the Arab world, but it falls short of developing the hypotheses and assumptions necessary to test and build sound management theory. Furthermore, environmental scholars treat individual organizations as passive agents of the extemal environment (Negandhi, 1983). They have not gone much beyond the identification of those factors that infiuence Arab managerial thinldng, and they have generally adopted investigative techniques and models that mimic Westem studies. The behavioral approach, on the other hand, attempts to study the behavior of individuals and groups within the market and the workplace. Issues of motivation, values, beliefs, decision styles.

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and other behavioral variables have been investigated. Behaviorists, psychologists, and political scientists have had some success in clarifying behavioral and attitudinal dimensions long neglected in the Arab world. Several scholars have contributed to 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 organizational and personal background affect managerial attitudes, values, and beliefs; and that, although Arab managers are far from homogenous in their orientations, it does appear that most Arab managers share some basic values that refiect Islamic and tribal traditions. Recentiy, more concerted attempts have been made to advance the analytical and critical analysis of management practices. These new attempts establish a foundation for developing management theory relevant to Arab culture. Ali (1987a, 1988a, b) and other researchers (Al-Kubaisy, 1985; El-Fathaly, 1985) offer such conceptual and critical investigations. These endeavors, although a step in the right direction, tend to rely heavily on Westem orientations while attempting to "Arabize" theory. Theory building and testing, however, can be enhanced through cooperative efforts among scholars from different fields (e.g., sociology, psychology, and public policy) across the Arab world. Furthermore, the "Arabized" group needs to be more critical and innovative so as to sensitize managers to the deficiencies in current systems. The Islamicized approach (using Islamic principles and tradition in conducting business affairs) has fiourished, to some extent, in the last two decades for the following reasons. First, there has been dissatisfaction among a large segment of the population with the Westemization process. Corruption, abuse of power, weakening family ties, and subscription to materialistic values have been attributed to the impact of the West. Secondly, the Iranian Islamic Revolution has revived an old interest among some Arabs in establishing an Islamic state and in managing

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affairs accordingly. Below is a brief description of some of its advocates' orientations. Nusair (1983) compared Islamic motivation to contemporary models of human needs (e.g., Argyris, Herzberg, Maslow) and concluded that all these models lack one thing in common: spiritual needs. His normative model has three categories of needs: physiological, intellectual, and spiritual. He suggests that spiritual needs represent a safety valve against frastration, crisis, failure, etc., and that a balance among the three major needs is possible in the Islamic state. Khadra (1985) presented a normative model of leadership, that of the Prophetic Leader. He contrasted this model with the Caliphal model of leadership, wbich he claims to be currently practiced in some Arab states. He suggests that the Arabs need a "great man," a man with some sort of "miracle" to lead them to their ideals. People iinder prophetic leaders would strive to perform their duties to their best because they are motivated by their love and free submission to the leader. Hawi (1982) described the qualides of the Islamic leader as knowledgeable, mentally stable, courageous, generous, wise, in control of his temper, forgiving, caring, sensitive, abiding by promises, honest, assertive, humble, alert, sincere, patient, cheerful, not hasty in making decisions, receptive and willing to give advices, attentive, a good organizer, rewarding, respectable in his appearance, and appreciative. Hawi suggests that social, economic, and political justice can be realized only voider Islamic rules, and that the welfare of society would be improved considerably if Islamic principles were applied. Abu-Sin (1981) provided a relatively more coherent prescriptive approach to Islamic administrative theory. He argues that Islamic administrative theory: (1) reflects the social philosophy of the Islamic system; (2) recognizes economic forces and their impact on individuals and organizations, and that individuals' physiological needs must be satisfied to achieve organizational goals; (3) recognizes the importance of achieving a balance between the spiritual and psychological needs of individuals; and

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(4) is based on the principles of hierarchical relationships, stractuiing of organization, planning of work, and obedience to formal authority. Sharfiiddin (1987) attempted to identify the principles of Islamic theory of administration. He refers to the Quran and the Prophet Mohammed's teachings and practice to refine basic principles of administration. He indicated that the Islamic theory of organization shares some similarities with the systems approach and bureaucracy. It resembles the systems approach in that it views administration as a subsystem that must reflect the values and objectives of the larger social system and must be responsive to its needs. It is similar to bureaucracy in that it advocates the clarification of roles, the chain of command, hierarchical relations, unity of command, obedience and compliance with formal authority, and the development of skillful employees through training. However, he argued that Islamic theory of organization differs from the two approaches by integrating the socioeconomic needs ofthe employees with their humanistic and spiritual needs. The above groups have made little contribution to furthering our understanding of management and organization reality in the Arab world. Nevertheless, in their attempt to simplify matters, researchers point to tribalism as an issue critical to Arab management thought. Tribalism (Sheikdom) is integrated into both political and economic systems. Despite political constraints, business organizations across Arab nations, from Morocco to Iraq, have flourished. These organizations capitalize upon three important pillars of tribalism: individual, family, and tribe. Several successful examples were formed around strong individual will and/or family-tribe networks, such as Osman enterprises (Egypt); AlAsad and Al-Harriri (Lebanon); Ibin-Binhuha, Kubha, and AlDamarchi (Iraq); Alghanim, Al-Behbahani, and Al-Marzoukh (Kuwait); Al-Futtaim, and Galadaris (United Arab Emirates); Fakhroo, Algosuibi, and Kanoo (Bahrain); Al-Ghanem and AlKhouri (Qatar); Algosuibi, Alireza, Kamel, Musellem, Pharoan, and Olayan (Saudi Arabia). These organizations have shown re-

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markable endurance during political and economic instability and their continuing growth evidences that they are well managed. To enhance the development of management and organization theory in the Arab world, researchers should identify the principles upon which these organizations are built, the role of the founders/leaders, and the forces that shape and maintain their survival and growth. Many Arab researchers believe that Arab society has a unique and peculiar culture. K we assume this is true, then the agenda for future research is to identify the basic assumptions and beliefs that govem Arab business organizations and contrast these beliefs with that of Westem types of organization (North American and socialist-communist models). The North American model has been dominated by the belief that managers exist to serve the stockholders. Managers are agents of the owner, and the organization exists to generate wealth for the owners of capital. In the socialist and communist models, on the other hand, management exists to serve the interests of the state and the ruling party. In the Arab world, tribalism is rooted in economic, social, and political life. Managers and organizations exist to further the interests of a collective group (individual, family, and layers of tribal network). The sophistication and complexity of this phenomenon have not been matched with a comparable management theory. While model development is beyond the scope of this paper, it is possible to suggest that future studies could benefit from refining the "sheikocracy" model and that of Khadra's model of leadership. Both models have the potential to enhance and enrich the conceptual development of organization and management theory. Organizational elements appropriate to conceptual development are consultation and egalitarian approaches, flat structure, patemalistic type of central authority, intuition, open-door policy, compassion and personalized relationships, avoidance of strict rules, direct personal orders, and public criticism, verbal appraisal, and innergroup goal setting. In general, it can be said that the study of Arab managerial thought is still in its infancy. Only recently have serious attempts

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been made to identify and analyze components of Arab management and organization. It is obvious, as Jasim (1987b) argues, that there is a crisis in the Arab world in ideology, and in political, social, and economic systems. This crisis, which has left its impact on individuals and organizations, is preventing the natural evolution of sound management thinldng. It is possible, therefore, to suggest that Arab management thinking has not advanced to the point that it is possible to analyze accurately Arab management practice and to develop models for explaining organizational environment. Some new events are taking place in the international arena that may have an influence on tiiat management and organization environment in the future. This will be discussed in the following section. Arab perestroika and management The profound change that has transformed the political situation in the Soviet Union and Eastem Europe in 1989-90 may induce new and significant changes in the Arab world. Westem observers are optimistic that such changes can lead to immediate liberalization and freedom (see Axelgard, 1989; Moffett and Friedman, 1990). These observers, however, ignore basic aspects of the reality of Arab politics: the personalized aspects of authority, tribalism, and fluidity, and alternating fission and fusion of group coalitions and alliances. These aspects are capable of containing or slowing down the march toward democracy in the age of freedom. To delay and/or encounter the quest for freedom and democracy, the Arab regimes have launched two strategies at the state and regional levels. At the state level, the self-claimed socialist states have responded with various programs: privatizing state enterprises, encouraging private investment, relaxing trade barriers. In addition, these regimes have started to debate the merit of multi-party political systems. The conservative regimes of the Gulf point to God's blessing of stability, munificence of their rulers, and to the validity of their systems; the events in Eastem Europe demonstrate that the socialist and communist ide-

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ologies and political organizations are alien to Islamic culture and are sources of instability (the Saudi regime was the first to initiate this strategy). Li the other conservative states (e.g., Jordan and Morocco), the political elites have permitted limited parliamentary election while asserting their direct descent from the Prophet Mohammed. At the regional level, the Arab regimes, in a smart move to direct people's attention from worsening economic and political situationsj have established some forms of cooperation and integration. For example, Egypt, Jordan, Iraq, and North Yemen decided on February 16, 1989 to establish the Arab Cooperation Council. A few days later, the regimes of the Arab Maghreb (west) states (Algeria, Libya, Mauritania, Morocco, and Tunisia) announced the emergence of the Arab Maghreb Union. Likewise, the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and U.A.E.) had a meeting in Oman and decided to discuss proposals for the need of a unified market and defense system. These forms of unity of regimes, however, are not expected to stand the pressure of democracy and may only for a short time prevent popular eruption. A liberalization process in the Arab world is an eventual certainty. The process is linked to two concems that are currently debated in the region. The first is the timing of change. To answer this concern, one has to keep in mind that, unlike Eastern Europe, the Arab states, especially those that are oil based, have cleverly sought to buy popular support with a broad array of welfare-state subsidies and manipulation. For example, in Iraq and Libya, the president of each state makes frequent and unannounced visits to people at their homes in cities and villages across the country. During his visit, the president distributes free TV sets, cars, and grants houses. The personalized aspect of authority and treating state resources as personal property that should be dispersed among supporters haye been vital factors in securing the people's submission. A political reform movement, nevertheless, is at work. The Arab regimes may be able to slow it down, but, certainly, it is going to be costly for these regimes to

MANAGEMEm' THEORY IN A TRANSITIONAL SOCIETY 29

prevent the process of democracy. Evidence across the Arab states indicates that existing regimes do not believe in free elections because they may be viewed as an acknowledgment of their illegitimacy. The events in Eastern Europe call into question the legitimacy of Arab governments and challenge its religious and political justification. The second vital concern is related to the scope of liberalization or reform process. The Arab states in the last twenty years have undergone dramatic political, social, and economic changes. During the 1950s and 1960s, the Arab nationalist movement was strong, and one could speak of the Arab identity and the Arab personality. Subsequently, Arab intellectuals and activists developed economic and social programs that were heavily influenced by socialist principles. President Nasser of Egypt was the hero of pan-Arabism and when he nationalized foreign and major Egyptian corporations in 1961, other regimes, with some variations, followed suit. Arab goals of unity, freedom, and progress, however, faded after the death of its champion (Nasser) and after the dramatic increase in oil prices. The influence of the pan-Arab movement weakened, and, instead, attachment to the nation-state emerged as the dominant force. This has induced Fouad Ajami (1978/79) and Oded Yinon (1982), an Israeli strategist, to talk about the demise of pan-Arabism. Yinon states:
The Moslem Arab World is built like a temporary house of cards put together by foreigners (France and Britain in the Nineteen Twenties), without the wishes and desires of the inhabitants having been taken into account It was arbitrarily divided into 19 states, all made of combinations of minorities and ethnic groups which are hostile to one another, so that every Arab Moslem state nowadays faces ethnic social destruction from within and in some a civil war is already raging. (1982, p. 32)

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

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the Status quo, tribal and sectarian division in the Arab world, absence of national leaders who can capture the mind and rally the public around nationalistic goals, and mostly the Israeli challenge to Arab unity. The last force is extremely important, since Israel has the strategic and technical capacity to prevent the realization of such goals. Israel Shahak (1982) unfolds the Israeli plan for the Arab world. 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 (and probably the most knowledgeable in Israel, on this topic) writes about the "best" that can happen for Israeli interests in Iraq: "The dissolution of Iraq into a Shiite state, a Sunni state and the separation of the Kurdish parL"

Evidence indicates that pan-Arabism has the potential to be the major driving force for Arab liberalization and for Arab state strategic cooperation and/or unity. These indicators are as follows. (1) The rise of Islamic movements in almost all Arab states: the new Islamic movement, unlike the ones that flourished in the 1940s and 1950s, places emphasis on Arab dimension and identity. Furthermore, its programs contain some economic and social perspective for the future state. (2) The failure of Arab regimes (and especially the ruling political organizations, e.g., Bath Socialist in Iraq and Syria, Algeria's National Liberation Front) and the conservative regimes to develop and grow beyond a sectarian and tribal mentality induce the public to look for viable alternatives for solving social and economic problems. (3) Arab unity institutions are flourishing across the Arab states (e.g.. Center for Arab Unity Study, Center For Nationalism Growth). (4) Nationalistic thinkers have shown a new and significant level of maturity and realism in their approaches (e.g., Al-Jabri, Morocco; Bennoune, Algeria; Syed Yasin, Egypt; Syed Jasim, Iraq; Marqus, Syria; Al-Khatuib, Kuwait). (5) The conservative elites who, until recently, were preoccupied with a narrow interest of the new na-

MANAGEMENT THEORY IN A TRANSTTIONAL SOCIETY 31

tion-state show a modest interest in Arab unity. For example, Ali Latafi (former prime minister of Egypt) and Mohammed AlMulla (secretary general for the Arab Gulf Chamber of Commerce) 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 have found it more profitable to establish their industrial bases in their home states and in other parts of the Arab world. Businessmen and their professional organizations are exerting influence on the Arab governments to lift tariffs on Arab products and capital movement across the region. This new pragmatism and reaUsm among Arab managers and entrepreneurs could be critical for economic unity and integration. Regardless of the direction and nature of the Arab liberation movement (pan-Arabism vs. nation-state), the Arab states are destined, like the rest of the world, for changes. This poses the following questions. What is the future direction of economic reform? And what is the dominant vision that would shape economic systems and organizations? Two schools of thought are identifiable. The first assumes that Islamic movements are the only forces able to topple the existing regimes and are the only winners of the liberalization process. The commitment of Islamic forces to democratic practices is uncertain. One expects, nevertheless, an Islamic form of organization to be dominant. Many of the Islamic leaders, however, have no realistic world vision and are out of touch with reality. Since the Arab people have been victims of oppression and arbitrary use of power, they are not likely to settle for anything but freedom and democracy. Unless the Islamic forces develop programs that tolerate diversity in beliefs and outlooks, and are willing to cooperate with other forces on a democratic basis, their chances of meeting the challenges ahead are negligible. The second school advances that the Arab region is a comfortable place for moderation. This is a realistic view and is based on the assumption that the region has witnessed economic crises and devastating wars that resulted in a high level of unemployment

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and inflation, economic stagnation, corruption, and human suffering and dissatisfaction. Domestic pressures along with a growing trend toward freedom in the world open the door for a multi-party democratic system and for a type of market economy with limited state intervention. An era of freedom would allow the Arab people to assume their vital role in the intemational arena and to enrich their cultural contribution to world civilization. Arab business organizations are expected to mirror changes in society. As agents of change, new managers would be sensitive to the challenges they face at the organizational and societal levels. A new envirormient of political pluralism, along with freedom of expression and respect for human dignity, should motivate managers to use their talents and enhance their attitudes toward risk-taking. Intuition and courage, flexibility and tolerance, compassion and honesty, loyalty and commitment to goals were cherished by the Arabs during medieval times and would flourish again in the age of freedom. Managers in the coming years would be humanistic in their approaches and hopeful that the future is for those who are actively involved in economic and social changes. In conducting their organizations' affairs, they would value goal setting, consultative/participative decision making, and the contributions of employees. The role of the father figure, at the top of the organization, would take on new meaning, sustaining group cohesiveness in line with society's needs. References
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