16_jwe_3-4_finalna_ver UDK: 005.32:331.1-055.2(53) 005.342 JEL: M13, B54 COBISS.SR-ID: 27961356 ORIGINAL SCIENTIFIC PAPER Intrinsic Subtleties of Saudi Arabian Female Startups Khan Rahatullah Muhammad1 Entrepreneurship Department - Effat University Jeddah, Saudi Arabia Sharpe Norean McDonough School of Business, Georgetown University, USA A B S T R A C T The scholarly contributions apprising values and motivations of female entrepreneurs whether it is work, life or family values and factors that drive them to business is scant as noted by GEM, 2011; Becker, 1985; Gronau , S., 1997; Thomas and Mueller, 2000 and Baker et al., 2005. Even less is the information regarding the Saudi Arabian females who are breaking the shackles of and who are joining the Saudi entrepreneurial workforce to shape their economy and society. This exploratory study investigates the female startup dynamics, antecedents, values, motivations, triggers, effects and role of society in propelling female startups in the Kingdom from different perspectives and endeavors. The study shows that various taboos attached to working outside the home are being shattered and that families and husbands are more cooperative in supporting female startups. A number of issues hinder the growth and development of these startups and opportunities are being explored. The entrepreneurship ecosystem can continue to benefit from stakeholder intervention and assistance at strategic levels of the entrepreneurial process and we provide recommendations. 1 Email: mkhan@effatuniversity.edu.sa 36 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) Introduction There is a general agreement among management practitioners and researchers that successful new ventures contribute to employment, political and social stability, innovation, and competition (Thurik & Wennekers, 2004; Zedtwitz, 2003; Hoffman, et al. 1998; and Dunkelberg, 1995). Similarly, the success of small and medium enterprises (SME’s) is also largely attributed to entrepreneurial abilities (Covin and Slevin, 1989; Dyer and Ha-Brookshire, 2008). As Zimmerman (2007) states, “Entrepreneurship is the recognition or creation of an opportunity, coupled with action by an individual or group of individuals, to form a social, intrapreneurial, lifestyle, middle-market, or highly-liquid venture” Entrepreneurship has also become a defining business trend in many countries. We know that entrepreneurship is most successful in an ecosystem where it is supported at both the strategic level (by governmental organizations) and the institutional level (Rahatullah, 2013). The ranks of entrepreneurs world-wide now contain a sizable contingent of women (Dechant and Asya, 2005). As a result, research into the pathways of entrepreneurship as a general phenomenon, as well as a career option for women has flourished in recent years (see, for example, Dechant and Al- Lamky, 2005; Kelly, et al 2013. However, very little of this research has focused on female entrepreneurs in Arab countries, where now private enterprise (SME’s and Entrepreneurship) is viewed as a way for these nations to reduce their reliance on oil and dependence on an expatriate workforce (Rahatullah, 2013). Morris (2001) maintains, "entrepreneurship is economic development is entrepreneurship." Developing and transitional economies, in particular, count on small business enterprise to stimulate economic growth, replace crumbling state-owned organizations and create job opportunities (Mazzarol et al., 1999). A more recent United Nations report suggests that the deep and complex social and economic problems in Arab countries would benefit from the development of the small business sector (Fergany, 2002). Many authors acknowledge that women entrepreneurs are important for the development of small business sector. They also suggest that women entrepreneurs can be instrumental in developing emerging economies. However, it is noticed that, unlike developed countries, there is lack of studies that can be used to assess the experience of women entrepreneurs in Arab countries - especially Saudi Arabia. One exception is the research Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 37 conducted by Dechant and Al-Lamky (2003), who employed semi- structured interviews to collect information on the background of Arab female entrepreneurs. Their research explored the women’s motivation to become entrepreneurs, their experience as entrepreneurs, and what problems confronted them as entrepreneurs conducting in Bahrain and Oman. There was also a study conducted to understand women entrepreneurship in UAE and Saudi Arabia (Al Lamky 2005). However, the numbers of studies and the context of the research on Arab women have been limited. Studies on Women Entrepreneurship in the Arab Region The literature has often ignored the role of values in determining the choices of women entrepreneurs. Studies such as McClelland, 1961; Begley and Boyd, 1987; and Fagenson, 1993, assert that women join the work force out of the need for achievement, respect, and initiative towards society. More recent studies show that a major factor influencing women entrepreneurs is the level of constraints for women in the workforce, as suggested by Welter and Smallbone; 2003 and Aidis et al, 2005. In some countries women have no access to capital or bank loans, while men have this advantage (Weeks, 2009). Education and Employment A recent report from the World Bank (2012) analyzed data from over 5000 companies in the Middle East and found that women owned approximately 13% of all firms – and of these female-owned firms, only 8% were micro firms (with < 10 employees), while over 30% had more than 250 employees. The countries with the greatest percentage of “large” female-owned firms were Egypt, Morocco, and Saudi Arabia. The World Bank also found that female-owned firms hired more workers in Egypt, Jordan, Saudi Arabia and Gaza and the West Bank – with women composing a larger proportion of the employees at female-owned firms. There appears to be a relationship between education and entrepreneurial activity. The 2012 GEM Report on women entrepreneurs demonstrated that in most regions, women entrepreneurs are more likely to have post-secondary education than women who are not entrepreneurs (30% vs. 26% for MENA/Mid-Asia) and more likely than male entrepreneurs (30% vs. 26% for MENA/Mid-Asia). For a comparison, 70% of female entrepreneurs in the U.S. and 55% in Israel have a post-secondary degree 38 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) (Kelly et al 2013). This agrees with the prior work of Mark et al. (2006) who found that the average level of education among women entrepreneurs in developed countries was higher than their counterparts in the developing countries, including Arab nations. Much earlier studies, such as Gartner, 1988; Reynolds and White, 1997; and Aldrich et al. 1998 had been inconsistent about education and business ownership. Sharpe and Schroeder (2016) analyzed data from the World Bank and found that unemployment among women in the Middle East is relatively high, although it differs by country; it has been lower over the past five years in Lebanon, Israel, and Qatar (2-12%), compared to Egypt, Saudi Arabia, and Jordan (14–28%). These employment rates arise from numerous challenges that women face in the Middle East, as it is well documented that the perception of women outside the home varies by country and culture. These perceptions combined with the restrictions for women in banking and ownership make starting companies more difficult for women than for men in the Arab region. Culture and Women Entrepreneurship in Arab Countries Previous studies have revealed that culture is an important factor used to explain variations in entrepreneurship among societies (Cornwall, 1998; Wennekers et al., 2001; Stewart et al., 2003; Dechant and Al-Lamky, 2005). In the Arab countries, in particular, women participation in the labor force is influenced by culture, as well as by Islamic principles. The Dechant and Al- Lamky (2005) study pointed to some cultural practices that might prevent women from conducting their business as compared to men. Nilufer’s (2001) work on socio-cultural factors in developing countries showed that there is a social influence on women's decision to become an entrepreneur. Such socio-cultural factors could be religious values, ethnic diversity and marital status. Whereas, Carswell and Rolland (2004) did not find any relationship between socio-cultural factors, such as religious values and ethnic diversity and the reduction in business start-up rate. On the other hand, Salehi-Isfahani (2000) noticed that married women in developing countries are less likely to participate in the country's labor force. She also found that there is limited women participation in the labor force owing to social norms where married women participation is less than single or widowed women. Her study established that married women have the lowest participation rate in the Iranian labor force. Similarly, Assaad and El- Hamidi (2002) found that women participation in Egypt is significantly less Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 39 for married women. Shah and Al-Qudsi (1990) concluded that single women participation is almost twice as married women participation in the Kuwaiti labor force. One constraint is that different cultures have different domestication expectations. Ram (1996) determined that women entrepreneurs felt that they were overloaded with domestic responsibilities. The findings showed that 43.20% did not get any help for domestic responsibilities where as 37% received some help and 20% received help to large extent. Among the persons rendering assistance in domestic responsibilities, maids were the primary source of help (25%). Among the family, husbands rendered help in setting up businesses in 12% of the cases followed by children in 11% of the cases. In a study of Ozgen and Ufuk (1998) on home-based women entrepreneurs living in Ankara city, it was determined that 63% of the women did not get any help for domestic responsibilities. In addition to domestic responsibilities, the lack of time available due to family commitments has been documented as a constraint in studies conducted by Karim (2000) in Bangladesh and de Groot (2001) in Ivory Coast, Ethiopia, Mali, Morocco, Senegal, and Zimbabwe. Finally, the external support for entrepreneurs varies by culture. Developing countries lack effective women organizations that enhance their own decision-making. Zewde and Associates (2002) pointed out that the absence of appropriate and effective women entrepreneurs' organizations and associations may have a negative effect on women enterprise development. Availability and use of money is a significant cultural challenge due to social position and family commitments of women in the Arab world. Carter et al. (2001) showed that women entrepreneurs find it difficult to raise the start-up capital and Ngozi (2002) demonstrated that since women do not have the required wealth, they cannot secure the required collateral to obtain a bank's loan. In addition, their social position limits their ability to establish a financial network and their ability to establish good relationships with banks, due to gender discrimination and stereotyping. Motivational Factors Different factors motivate a woman to become an entrepreneur. Robinson (2001) referred to the push and pull factors. The push factor is associated with negative conditions, while the pull factor is attributed to positive developments. Examples of push factors include low household 40 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) income, job dissatisfaction, strict working hours, or even a lack of job opportunities. The pull factors on the other hand include the need for self- accomplishment and the desire to help others. Dhaliwal (1998) found the push factor to be evident in developing countries, while Orhan and Scott, (2001) and Islam (2012) showed evidence that women entrepreneurs in developing countries were motivated by a combination of push and pull factors. They suggested earning money, family tradition, higher social status, self-employment, economic freedom, as the major pull factors, whereas a lack of education, dissatisfaction in current job, and family economic hardship were identified as the push factors. Empirical evidence on Bahrain and Oman in the study by Dechant and Al-Lamky (2005) showed pull factors, such as opportunities, the need for achievement, self- fulfillment and desire to help others, motivated women to become entrepreneurs in most of the cases. Dechant and Asya (2005) found that achievement was the primary driver for self-employment among the Bahraini and Omani female entrepreneurs. The scholars assert that this could be attributed to their relatively high socioeconomic status and educational levels. It might also be reasoned, however, that in Arab countries which are high in Power Distance and Uncertainty Avoidance and low in Individualism, women have "more difficulties in doing things their way since existing organizations and structures are less suited for them" (Wennekers et al., 2001). The study subjects may have chosen self-employment as a viable option to meet their need for achievement in a society imbued with organizational and cultural constraints as regards the potential of women. Enterprise Characteristics Coleman (2002) confirmed that women tend to mainly participate in the services sector, since the sector facilitates more prospects for job opportunities. This conclusion was reached by Dechant and Al-Lamky (2005) who found that Bahraini and Omani women entrepreneurs chose the services sector for their investment. However, the study referred to other factors, such as previous experience, availability of opportunities, economics and cultural, that might influence women entrepreneurs' decisions. Another factor dictating women's decisions to become entrepreneurs is the size of the business enterprise. Since women entrepreneurs are attracted to the services sector, the size of their businesses is relatively small. Women Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 41 entrepreneurships are relatively small in size and are likely to employ fewer numbers of people mainly between 5 and 25. (Coleman, 2002; Robb, 2002; and Dechant and Al-Lamky, 2005). Dechant and Al-Lamky (2005) also identified use of social media as another characteristic of Arab women enterprises. Numerous examples exist of women using the internet to start firms that engage in e-commerce to see anything from clothing to food to educational services (see for example, Sharpe and Schroeder, 2016). Another characteristic of female startups is their important use of “soft skills.” Riley (2006) and Heltzel (2015) demonstrated the importance of soft skills for startups and identified training regimes, where training is defined specifically by others as the development of knowledge, skills and/or attitudes required to perform adequately a given job (Armstrong, 2001; Sonmez 2015; Fillipo, 1984). The importance of soft skills is emphasized by Stuart (2013), who states those Human Resources professions in training and development are important to provide employees continuous improvement in their skills and attitudes. Human Resource professions ensure that the company’s optimal performance is achieved through leveraging human capital and aligning skills and performance with organizational goals (Elaine, 2002; Houghton and Prosico, 2001). A company with employees aligned on goals for the future is able to reach those accomplishments faster (Frost, 2013). These studies identify a number of soft skills required by startups, which range from basic business planning to financial feasibility analysis, and sophisticated business strategic skills. A number of studies, such as Kaiser (2015); Nunez (2015); Hisrich and Brush (1984); Lussier (1995); and Markku (2005) identified numerous startup, marketing, management and social skills necessary for startups; a total of 17 commonly stated skills encompass the above areas. These skills include communication, supervision, problem solving, Leadership, conflict resolution, team working, flexibility, creativity, assertiveness, diplomacy, counselling, coaching and mentoring, negotiating and influencing, branding, sales and marketing, relationship building and networking. Methods Prior research shows that there is a lack of information on female entrepreneurship in Arab nations. We identify a number of areas, where more research is needed: − Nature of the businesses started by women; 42 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) − Roles of family, motherhood, spouse and society in the business; − Underlying motivations of female startups; − Assistance provided by Entrepreneurship Ecosystem stakeholders; and − Challenges faced by female entrepreneurs. This information is lacking not only for the Middle East, but more specifically for Saudi Arabia. Thus, this study explores the vital values, characteristics and features of female entrepreneurship in Saudi Arabia Given the difficulties associated in reaching out to female start-ups in Saudi Arabia, we placed a structured questionnaire on-line (using survey monkey.com) with a target sample of 50 diverse female entrepreneurs from across Saudi Arabia. The survey instrument was designed to measure the values, characteristics, motivations, skills required, challenges, and features of female startups in Saudi Arabia. Once the survey was posted, we asked the chambers of commerce in Jeddah, Riyadh, Madina Al Munawwara, Khobar, Tabuk and Makkah Al Mukarramah, to help secure responses from female startups. Some of the female startups known to the authors were also contacted. This outreach was necessary for two reasons. First, numerous studies including Rahatullah (2013, 2014); Assad and El Hamidi (2002); Baker, Gedajlovic and Lubatkim (2005); and Al Qudaiby and Rahatullah (2014), pointed out the issues in reaching out to respondents -- and particularly female respondents in the Kingdom, owing to its tradition as a closed conservative society. Second, although on the rise, the current number of established female startups is limited in the Kingdom, as identified by Dechant and Lamky (2005). Our strategy proved successful and 80 female startups completed the questionnaire on survey monkey. The responses were then downloaded for data presentation and detailed analysis using SPSS. After the analysis had been conducted, external validity was achieved by conducting three interviews with entrepreneurs who had not responded to the survey. These established entrepreneurs have developed their businesses in the fields of event management, education and fashion. They started their businesses in the years between 2000 and 2002 in Jeddah and Riyadh -- the main economic cities of the Kingdom. The names of these established female entrepreneurs are confidential and represent the fashion industry, the event management industry and the education industry. Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 43 The questionnaire included 28 structured close-ended questions in the following areas: − Nature of business; − Startup status (i.e., personal status, Marital Status, Motherhood status); − Treatment received as a woman; − Knowledge of government agencies; − Assistance from families and husband; − Interaction of female startups with entrepreneurship ecosystem; − Startup challenges and motivations; and − Attitude of society towards female startups. Data Presentation Table 1 shows the location of all 80 female startups who responded to the survey. The highest numbers of participating female startups were from Jeddah, with 23 female startups. Riyadh with 21, Khobar with 14 and, Makkah Mukarramah with 11 responses. Female startups from Madina Munawwara and then Tabuk also had participation. Table 1: Respondents Al Madiha Munawwarah Jaddah Khobar Makkah Al Mukarramah Riyadn Tabuk Total 6 23 14 11 21 5 80 The questionnaire had 16 business areas identified with an option for others. However, the respondents identified themselves as belonging to seven diverse activities as shown. Figure 1 and Table 2 show that the respondents belonged to a wide spectrum of industrial sectors of the Kingdom. The majority of female entrepreneurs are married, however, a noticeable number of single and divorced women also start businesses in Saudi Arabia. This might be a significant change and shift from the past. However, this cannot be substantiated, as we do not have relevant time series data. It is clear that the women startups are mainly in the following industries: jewelry related, spa related, boutiques, food related, beauty, event planning and graphic design. 44 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) Figure 1: Marital status of female startups Table 2: Business nature of female startups Business Sector Number of Respondents Jewelry related 8 Spa and related 7 Boutique including Abaya 17 Food (home cooked and restaurants) 9 Beauty related 16 The research showed that the majority of the startups were founded by mothers. This was a surprise and is a clear shift from the past, although Saudi Arabia remains a conservative society, where women are more likely to remain at home and raise a family than to work outside the home Table 3 shows that motherhood has a profound effect on women’s perceptions. An overwhelming majority agrees that motherhood leads to better leadership qualities (>75%) and the ability to multi-task (> 80%). However, being a mother was perceived to have less of an impact on being lenient with clients/employees or being a better team manager. Table 3: Motherhood effects Answer Options Strongly Disagree Do Not Agree Maybe Agree Strongly Agree Better leadership Qualities 10 2 7 33 28 Too lenient with clients and employees 7 46 10 9 8 Better team manager 8 34 9 15 14 Better at Multitasking 5 4 8 21 42 Table 3 provides information on the strategic stakeholders’ (government agencies) behavior and dealings with female startups. The larger portion of female startups point out that they do not get any preferential treatment or dealing by the government offices and strategic stakeholders (validated by Rahatullah, 2013). The response on the women lobbying and support groups has been mixed. Almost similar numbers of female startups recognize the efforts of such groups as not. Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 45 Table 4: Ecosystem Stakeholder dealing and behavior with female startups Answer Options Strongly Disagree Do Not Agree Maybe Agree Strongly Agree You get preferential treatment at government offices 6 46 21 5 2 The suppliers deliver on time 6 11 0 36 27 The suppliers and other stakeholders treat women differently than men 23 19 8 17 13 The women lobbies and support groups provide help 6 27 6 25 16 Table 4 identifies the support provided by non-government agencies (institutional stakeholders of entrepreneurship ecosystem) to female startups as validated in Rahatullah 2015. It is evident that the overwhelming majority of female startups do not recognize agency support for children education, mentoring, transportation and funding. Table 5: Ecosystem Stakeholder dealing and behavior with female startups Answer Options Strongly Disagree Do Not Agree Maybe Agree Strongly Agree Children education support 56 10 11 2 1 Project funding 0 0 1 8 71 Education of the entrepreneur 5 15 37 11 12 Mentoring of Entrepreneur 13 51 17 7 0 Transportation facilities 62 13 5 0 0 Business Training 14 35 15 7 9 Business registration 2 1 36 35 6 Business Licensing 2 0 21 45 12 Funding till business is suitable 11 14 39 11 5 Reaching beyond the demographic boundaries of serving only men 7 2 3 22 46 46 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) However, the project financing, entrepreneurship education and business licensing services are recognized by the startups as available. This shows lack of awareness provided by the agencies and the seeking of information by the startups. The Family and Husband Role Figures 2 and 3 provide an insight into the role of families in female startups in Saudi Arabia. Our results seem to show the changing dynamics and variation in the social / family fabric of the society. There was a time when Saudi Arabia was known for its ultra conservative nature where the government and many of its citizens desire to preserve their religious values and ancient traditions (Rice, 2004). We believe the society is changing and so are the family values. Figure 2 and 3: Family and Husband Role 0 5 10 15 20 25 30 35 40 Family provided moral assistance Family provided financial assistance Family provided business assistance Assistance from the family Strongly Disagree Do Not Agree Maybe Agree Strongly Agree Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 47 It can be seen that the majority of the female startups obtained the moral support and financial assistance from their families; however, a number of the respondents assert that the families did not provide the business assistance, (i.e. practical support that includes preparing plans, conducting marketing and or developing budgets). It is hence conceivable that the families do not have the relevant acumen or financial capability to assist these start-ups. It can also be implied here that the families may not have the necessary funds for the startup or they do not wish to contribute or in presence of the organizations like human resource development fund (HRDF) that pays salaries to startups till the business is stable. Our data reveal that the role of husbands appears to be substantial (where applicable). It is a noticeable shift from past as noted by Rice (2004). Husbands in our sample seem to have been providing moral, financial and business assistance to their wives to establish the business. Female Startup Interaction with the Ecosystem Figure 4 shows the startup interaction with the ecosystem. A number of stakeholders in the ecosystem were identified for the respondents to show their recognition level and identify the assistance these organizations provide. 0 5 10 15 20 25 30 35 40 Husband provided moral assistance Husband provided financial assistance Husband provided business assistance Assistance from husband Strongly Disagree Do Not Agree Maybe Agree Strongly Agree 48 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) It can be seen from the graph that the majority of the respondents claim that they either had an interaction or know Injaz, Kaust, Bank al ahli (NCB), Khadija bint Khuwalied Center, Bab Rizk Jameel, Prince Sultan Fund, Centennial Fund and chambers of commerce. The organizations mentioned above are training, lending and licensing organizations, whereas, Kaust is famous for its work and is recognized across the Middle East as a premier research organization. Figure 4: Startup interaction in Ecosystem The techno valleys, Kacst etc., are less known because of the nature of their services. Most of the female startups are in traditional businesses that do not require high-end assistance and machinery and equipment. It can be implied that since Al Zamil group’s work is limited to a particular part of the country, therefore, it is less known among the startups across the kingdom. Similarly, Technical and Vocational Training Centers (TVTC) are also male-oriented, hence fewer females know them. It is, however, surprising that the startups have little knowledge about the other lending institutions, such as, Al Jazira, Saudi Credit and Savings and other banks, lending institutions and funds. 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Chambers of Commerce Saudi Credit and Savings Bank King Abdulaziz City for Science and… Al Zamil Group Human Resource Development Fund (HRDF) Technical and Vocational Training Centers Ministry of Industries Wae'd (Aramco) Makkah Techno Valley Khadija Bint Khuwailed Endeavor KAUST Strongly Disagree Do Not Agree Maybe Agree Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 49 Female Startup Challenges Figure 5 identifies the major challenges being faced by the female startups in Saudi Arabia. It can be seen that the three main challenges are communications skills, managing business and family affairs concurrently, and knowledge of the Saudi labor law, respectively. Other significant issues are knowledge of how to start a business, as well as the skills needed (i.e. business and strategic planning, marketing and budgeting and the governmental policies and procedures). These are prominent concerns of the startups. These findings are similar to the Saudi Arabian ecosystem study (Rahatullah, 2013). It can be implied from these findings that Saudi startups require interventions by both the strategic and institutional levels of the ecosystem to strengthen enterprise. Female startups have endorsed the need for soft skills incubators, training institutes, mentors and coaches. Startups also have shown need for government to publicize the laws and procedures and systems more. It accrues the need from chambers of commerce to provide further assistance to these first stage female entrepreneurs. This also reveals the change in the culture of the Kingdom where the openness has taken its hold and the families do not hold restrictions on female startups. Figure 5: Female Startup Challenges 0 10 20 30 40 50 60 70 E du ca ti on K no w le dg e of b us in es s… K no w le dg e of m ar ke ti ng … K no w le dg e of s tr at ge ic … K no w le dg e of o pe ra ti o ns … K no w le dg e of f in an ci al … K no w le dg e of b ud g et in g K no w le dg e of H R i ss ue s K no w le dg e of S au d i… K no w le dg e of H o w t o st ar t… S oc ie ta l ta bo o s R es tr ic ti on s fr om f am il y R es tr ic ti on s fr om h us b an d M an ag in g fa m il y an d… F in di ng r ig ht o rg an iz at io n … K no w le dg e of s up pl ie rs B u si n es s co m m u ni ca ti on … S al es s k il ls T ea m b ui ld in g a nd … F in di ng t he r ig h t em p lo ye es K no w le dg e of … K no w le dg e of p ro du ct … Strongly Disagree Do Not Agree Maybe Agree Strongly Agree 50 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) Classifying the Challenges In order to better understand better the challenges being faced by the women startups, a factor reduction using principal component analysis extraction method was used. The three factors arrived at in Table 8 show major areas of challenges for the female startups: Startup Related, Planning and Society, and Team issues. The challenges also show the lack of the necessary skills and knowledge possessed by the startups. This presents a huge opportunity for Startup related Planning Society & Team Education .1606 .0163 .0100 Know ledge of business planning .0639 .1064 .0079 Know ledge of marketing planning .0607 .1267 .0783 Know ledge of stratgeic planning .0607 .1579 .0128 Know ledge of operations planning .0614 .1010 .0155 Know ledge of f inancial planning .0594 .1389 .0261 Know ledge of budgeting .0579 .1067 .0262 Know ledge of HR issues .0524 .0578 .1441 Know ledge of Saudi Labour Law .1106 .0419 .0113 Know ledge of How to start business .1059 .0702 .0129 Societal taboos .0265 .0553 .2055 Restrictions f rom family .0111 .2311 .2055 Restrictions f rom husband .0223 .0392 .2051 Managing f amily and business af fairs .0988 - .0691 .1058 Finding right organization to approach f or assistance .1100 - .0963 .0331 Know ledge of suppliers .1206 - .1656 .0173 Business communication skills .1331 - .2791 .0293 Sales skills .0602 - .2253 - .0850 Team building and maintaining .0610 - .2060 .2059 Finding the right employees .0552 - .1596 .2106 Know ledge of Governmental policies/procedures .1001 .0121 - .0036 Know ledge of product launching .1091 .0749 - .0237 Table 8 - Com ponent Score Coefficient Matrix - Challenges' factoring Challenges Extraction Method: Principal Component Analysis. Component Scores. Com ponent Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 51 the organizations such as incubators, universities, chambers of commerce and industry and training and development institutes to offer such trainings. The startup related challenges include education, knowledge of Saudi labor law, government procedures and policies, launching the business, suppliers, finding the right organization to approach for assistance, developing communications skills, and education. All these are relevant to the startups and are common challenges for first stage entrepreneurs. It can be implied here that the need for the institutional level support organizations is important. This also shows the lack of the contact between the institutional level stakeholders and the startups. Challenges Faced by Particular Businesses In order to further investigate and understand the challenges being faced by the startups in more detail, the businesses were divided into eight main areas. The challenges shown separately regarding the different kinds of planning were grouped into one category, i.e. the business planning challenge. A bivariate correlation was carried out and challenges are correlated here separately (not factor wise). These correlations provide factual results. The most difficulties are being faced by the interior design, women related, clothing and lingerie and dentistry clinic businesses. These businesses are new and, therefore, the graduates who start their own business face numerous difficulties. Secondly, most of these startups would be younger women and it is quite understandable of the issues they face. The women in beauty parlor, therapies and Spa, children entertainment and education seem to have least challenges, which stamps the fact these are relatively more traditional businesses. T a b le 9 : C o rr el a ti o n s b et w ee n b us in es s ar ea s a n d c h al le n g es K n o w le d g e o f b u s in e s s p la n n in g K n o w le d g e o f b u d g e ti n g K n o w le d g e o f H R i s s u e s K n o w le d g e o f S a u d i L a b o u r L a w K n o w le d g e o f H o w t o s ta rt b u s in e s s S o c ie ta l ta b o o s R e s tr ic ti o n s fr o m f a m il y R e s tr ic ti o n s fr o m h u s b a n d M a n a g in g fa m il y a n d b u s in e s s a ff a ir s F in d in g ri g h t o rg a n iz a ti o n t o a p p ro a c h f o r a s s is ta n c e K n o w le d g e o f s u p p li e rs B u s in e s s c o m m u n ic a t io n s k il ls S a le s s k il ls T e a m b u il d in g a n d m a in ta in in g F in d in g t h e ri g h t e m p lo y e e s K n o w le d g e o f G o v e rn m e n t a l p o li c ie s /p ro c e d u re s K n o w le d g e o f p ro d u c t la u n c h in g P e a rs o n C o rr e la tio n .3 1 5 ** .1 8 5 * -. 0 0 1 .2 8 5 * .2 4 6 ** -. 0 1 3 -. 0 1 9 .0 5 2 .2 5 7 ** .2 8 5 ** -. 1 0 4 .2 7 4 * .0 6 3 -. 0 5 9 -. 0 5 9 .1 9 7 ** .0 6 5 S ig . (2 - ta ile d ) .0 0 5 .0 4 5 .9 9 4 .0 5 4 .0 0 8 .9 1 1 .8 6 8 .6 4 6 .0 0 6 .0 0 9 .3 5 8 .0 1 0 .5 8 4 .6 0 4 .6 0 5 .0 0 7 .5 7 0 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .2 5 1 ** .1 7 9 ** .0 9 2 .0 5 8 .2 5 7 * .2 6 1 ** .1 9 9 .0 8 6 .1 5 4 .2 7 3 ** -. 0 1 9 .0 2 1 .0 5 4 .0 7 1 .1 4 2 .0 3 5 .1 8 8 S ig . (2 - ta ile d ) .0 0 7 .0 0 6 .4 2 0 .6 1 2 .0 1 9 .0 0 9 .0 7 9 .4 4 6 .1 7 7 .0 0 4 .8 6 8 .8 5 7 .6 4 0 .5 3 2 .2 0 9 .7 6 1 .0 9 4 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .2 6 6 ** .0 9 7 .1 7 3 .0 0 9 .2 1 9 * .1 7 0 .0 2 7 .0 4 2 .0 2 1 .0 8 1 -. 0 0 6 .2 6 7 * .0 8 0 .0 9 3 -. 0 5 7 -. 0 6 4 -. 0 5 8 S ig . (2 - ta ile d ) .0 0 8 .3 9 4 .1 2 8 .9 3 6 .0 3 7 .1 3 2 .8 1 2 .7 1 5 .8 5 1 .0 4 7 .9 6 0 .0 9 9 .4 8 6 .4 1 0 .6 1 8 .5 7 5 .6 0 9 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n -. 1 4 2 -. 1 2 1 -. 1 8 3 -. 1 4 6 -. 1 2 2 -. 1 5 9 .2 3 5 * -. 1 5 7 -. 1 6 2 .2 8 1 ** -. 1 2 6 .2 5 1 * -. 2 0 3 -. 1 7 8 -. 1 5 7 -. 1 3 0 -. 1 1 8 S ig . (2 - ta ile d ) .2 0 8 .2 8 4 .1 0 7 .1 9 7 .2 8 5 .1 5 8 .0 9 7 .1 6 4 .0 0 2 .0 0 2 .2 6 4 .0 2 9 .0 7 3 .1 1 4 .1 6 3 .2 5 1 .2 9 5 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .0 2 3 .2 9 4 ** .1 7 3 .0 0 9 .1 0 3 .1 7 0 .0 2 7 .0 4 2 .0 2 1 .0 8 1 -. 0 0 6 -. 0 0 2 .0 8 0 .0 9 3 -. 0 5 7 -. 0 6 4 -. 0 5 8 S ig . (2 - ta ile d ) .8 3 8 .0 0 4 .1 2 8 .9 3 6 .3 6 7 .1 3 2 .8 1 2 .7 1 5 .8 5 1 .4 7 3 .9 6 0 .9 8 7 .4 8 6 .4 1 0 .6 1 8 .5 7 5 .6 0 9 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .2 6 4 ** .2 8 9 * -. 0 6 9 .1 7 0 .1 0 3 .1 7 0 .1 8 6 .1 2 1 .2 6 6 * .2 4 3 * .0 6 9 -. 1 5 4 .0 0 0 -. 1 4 8 -. 0 5 7 .2 7 1 * .2 6 6 * S ig . (2 - ta ile d ) .0 0 3 .0 3 9 .5 4 3 .1 3 1 .3 6 7 .1 3 2 .1 0 0 .2 8 7 .0 6 0 .0 4 7 .5 4 0 .1 7 6 1 .0 0 0 .1 9 1 .6 1 8 .0 3 7 .0 8 4 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .2 3 7 * .1 3 7 .0 7 3 -. 0 4 4 .0 3 1 .0 7 9 -. 0 1 8 .0 0 3 .1 4 5 .2 4 7 * .0 9 9 .1 0 5 .1 7 0 .0 7 6 .0 9 5 .0 2 6 .0 9 1 S ig . (2 - ta ile d ) .0 3 8 .2 2 4 .5 2 0 .6 9 6 .7 8 8 .4 8 8 .8 7 5 .9 8 0 .2 0 1 .0 1 3 .3 8 3 .3 5 6 .1 3 4 .5 0 4 .4 0 1 .8 1 7 .4 2 0 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 P e a rs o n C o rr e la tio n .2 8 5 * .2 7 9 * .2 4 7 ** .3 1 0 ** 0 .2 4 6 0 .2 3 7 0 .2 2 9 -. 1 9 8 .2 8 5 * -0 .2 6 4 0 .2 7 9 .2 6 3 * -0 .2 8 4 -0 .2 6 .2 5 5 * -0 .2 5 6 -0 .2 4 3 S ig . (2 - ta ile d ) .0 1 1 .0 3 2 .0 0 2 .0 0 5 .1 0 3 .2 0 9 .3 0 4 .0 7 9 .0 3 0 .4 0 2 .2 0 1 .0 1 4 .3 0 1 .7 0 2 .0 3 1 .2 2 0 .1 2 0 N 8 0 8 0 7 9 8 0 7 9 8 0 7 9 8 0 7 9 8 0 8 0 7 9 7 9 8 0 8 0 8 0 8 0 *. C o rr e la tio n is s ig n if ic a n t a t th e 0 .0 5 le v e l ( 2 -t a ile d ). ** . C o rr e la tio n is s ig n if ic a n t a t th e 0 .0 1 le v e l ( 2 -t a ile d ). T h e m a r k e t in g , O p e r a t io n s , S t r a t e g ic a n d f in a n c ia l p la n n in g a r e p u t t o g e t h e r f o r a n a ly s is B e a u ty r e la te d E v e n t P la n n in g W e b D e s ig n a n d C o m p u te rs G ra p h ic D e s ig n & I T F o o d in c lu d in g re s ta u ra n t a n d h o m e c o o k e d C o rr e la ti o n s J e w e lr y re la te d S p a r e la te d B o u ti q u e in c lu d in g A b a y a Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 53 The majority of the female startups seem to have the issues with planning, knowledge of Saudi labor law, team building and governmental policies. These skills are not taught and developed at their colleges and universities. Many startups also do not know the governmental procedures and policies, hence their licenses can be delayed. This can result in unnecessary interruption, suspension, or temporary adjournments in the startups, as most of the team is developed using expatriates. The visa and finding the immigrant workers are already an issue and a lack of knowledge of law and polices aggravate the situation. The females commencing and establishing a startup in a social arena face the least difficulty, which also is based on the fact that such projects are generally initiated by the women belonging to richer families, who have an established reputation and credentials. We have numerous examples of philanthropic and social enterprises being started by the women of leading business families in Saudi Arabia. Female Startup Motivations The findings as shown in Figure 6 somewhat support the work of Robinson (2001), Dhaliwal (1998), Orhan and Scott (2001), Islam (2012), Dechant and Al-Lamky (2005) and Dechant and Asya (2005), regarding the push and pull factors of motivation. However, the study refutes the Wennekers et al., (2001) narrative. Figure 6: Female Startup Motivations 0 10 20 30 40 50 60 T o ea rn m or e m on ey T o su pp or t fa m il y T o co nt ri b ut e to s o ci et y T o be f in an ci al ly in de pe nd en t T o be s o ci al ly in de pe nd en t T o be s o ci al ly re co gn iz ed T o ap pl y th e sk il ls le ar ne d T o tr y a nd p ro v id e be tt er f ut ur e fo r fa m il y T o do s om et h in g di ff er en t T o en ha nc e th e im ag e of w o m en T o su po rt a n ob le c au se T o be y ou r o w n B os s Strongly Disagree Do Not Agree Maybe Agree Strongly Agree 54 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) The push and pull factors for female startups vary a bit from what literature suggests as a general factor. The Saudi females seem to be more pulled than pushed in startups. As the society is becoming more and more liberal, female startups commence their venture to seek more social independence, recognition, enhance image, and become own boss. The circumstances also have been pushing them to support their families, as they largely are motivated by ‘wanting to earn more money’ and be ‘financially independent,’ perhaps influenced by the Saudi economy. Women startups are equally divided over their understanding and contention on contributing positively to the society. Motivation Antecedents Table 5 shows the motivations by motherhood category (yes, no) and reveals interesting results. Being a mother seems to affect the family thought on the female startups in motivating them ‘to try to provide a better future for their families’ and ‘be their own boss.’ Similarly, they are more concerned with enhancing the women image, to be socially recognized, and apply the skills they learned. This is an exciting development in a society such as Saudi Arabia and can imply the ‘breaking of shackles.’ The non-mother females also desire to do something different’ and ‘enhance the image of women.’ Table 10: Motivations Mean of Business Women who are Mothers A notable number of responses suggest that startups are purely commercial based and not created to support noble causes. It is mostly pull factors that help them seek to establish a startup. A notable number of responses did not start their business to support their family. The correlations between ‘being a mother’ and motivations to start an enterprise reveal some interesting information, as shown in Table 11. It To earn more m oney To s upport family To contribute to society To be financially independent To be s ocially independe nt To be s ocially recognize d To apply the s kills learned To try and provide better future for family To do something different To enhance the image of wom en To suport a noble cause To be your own Boss Mean Mean Mean Mean Mean Mean Mean Mean Mean Mean Mean Mean Mother 4.53 1.63 2.96 3.55 4.39 5.61 7.27 8.47 7.94 8.75 3.73 10.12 Not Mother 3.96 2.14 2.68 2.61 3.54 4.54 5.50 6.07 6.07 6.64 4.89 7.43 Table 10 - M otivations M eans of Bus ine ss Wom en w ho are Mothers Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 55 shows that intrinsic motivations are to create an additional source of income to support their family and have a better future for their families. It can then be implied that the female startups are now willing to take an active role in society and be productive both in the family and economy. Soft Skills Required and Tools to Acquire These Abilities The literature identifies a number of soft skills required by the first stage entrepreneurs to successfully commence a startup. Acknowledging the literature findings and repeating the same question, a more relevant and newer question was asked, i.e. how can these skills be provided? What tools are more appropriate, or how can these skills be acquired? The responses are elaborated below. Figure 7: Female Startups Soft Skills and their tools To earn more money To support family To contribute to society To be financially independent To be socially independent To be socially recognized To apply the skills learned To try and prov ide better future for family To do something different To enhance the image of women To suport a noble cause To be y our own Boss Pearson Correlation 0.103* 0.162* -.015 -.145 -.112 -.107 -.170 .229 * * -.184 -.196 -.218 -.212 Sig. (2-tailed) .003 .002 .895 .200 .324 .346 .131 .000 .102 .082 .052 .060 N 80 80 80 80 80 80 80 80 80 80 80 80 **. Correlation is significant at the 0.01 lev el (2-tailed). *. Correlation is significant at the 0.05 lev el (2-tailed). Table 11 - Mothe rhood e ffect on Motivations Being Mother 0 20 40 60 80 100 120 140 160 180 C o m m u n ic a ti o n S u p e rv is o ry P ro b le m s o lv in g L e a d e rs h ip C o n fl ic t re s o lu ti o n T e a m w o rk in g F le x ib il it y C re a ti v it y A s s e rt iv e n e s s C o u n s e li n g , C o a c h in g a n d m e n to ri n g N e g o ti a ti n g D ip lo m a c y In fl u e n c in g M a rk e ti n g S a le s B ra n d in g N e tw o rk in g R e la ti o n s h ip b u il d in g College/university Profissional training institute Mentors Coaches Incubator/Accelerator Distance learning 56 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) The role of professional training institutes, mentors and incubators tops the other modes of skills development. The role of universities follows the top 3. It has been pointed out by the respondents that the soft skills incubators can help build their creativity, influencing (personality), communications, leadership, negotiations and problem solving skills. Whereas, the mentors can successfully help the startups shine their relationship building, branding, marketing, diplomacy, negotiations, flexibility, conflict resolution and problem solving skills. Similarly, the female startups seem to opine that professional training institutes can polish their leadership, conflict resolution, assertiveness, counselling, influencing and relationship building skills. This supports the older studies and justifies Rahatullah (2013) work. Conclusions – The Great Evolution Is Happening It was witnessed in the literature review that there is a lack of evidence on the female startups in general - and for Saudi Arabian startups in particular. This research would open the doors for further research and enhance our understanding of the deficiencies and efficiencies ripe in the entrepreneurship ecosystem for women startups in Saudi Arabia. The findings above have contributed both to our knowledge of female startups in the Arab region and globally, however, there are some unique findings owing to different cultures and norms in Saudi Arabia. The Saudi Arabian women startup motivations and challenges emanate from their traditional culture, which as Afaf et al., (2014) states “is a masculine society… strongly affected by cultural traditions and religion. The separation of the genders is obligatory in Saudi cultures and societal norms impact on all sides of life. Communication between females and males is not allowed, except for close relatives and in special situations.” However, this study shows that shackles on women empowerment are being broken and that societal taboos and restrictions are under transition to a society and cultural of adaptability. There are numerous indicators for optimism for the women startups alongside the risks. The Literature pointed out that in the Arab countries women participation in the labor force is influenced by culture and shaped by the Islamic principles. The Dechant and Al-Lamky (2005) study pointed to some cultural practices that might prevent women from conducting their business as compared to men. This study again provides an updated view that the society is more Khan, R.M, et al., Saudi Arabian Female Startups, JWE (2016, No. 3-4, 35-65) 57 accommodating and supportive of female entrepreneurship. The role of family, husband and the society in general has been seen as a positive factor in contributing to female startups in Saudi Arabia. Similarly, it has been revealed that motherhood and economic conditions also affect the choice of females to commence a commercial venture. Similarly, the motivational factors provide a stark contrast between Saudi female startups and elsewhere. Studies such as McClelland (1961); Begley and Boyd (1987); and Fagenson (1993) assert that women join the work force out of the need for achievement, respect, and initiative towards the society. Whereas, in Saudi Arabia, in addition to independence and recognition, we witnessed more of the economic reasons (push factors) to start a business. The findings on challenges being faced by female startups are in contrast to Nilufer’s (2001); Carswell and Rolland (2004) and Salehi- Isfahani (2000). Their findings were different than what is found in Saudi Arabia. Startup related challenges are quite significant in Saudi Arabia, as compared to the developed and industrialized countries where an ecosystem is more evolved. This highlights the need to further strengthen the ecosystem’s institutional stakeholders so that they can enable enterprise. Society and team-related challenges are not highlighted significantly in the literature. The challenges envisaged by Ram (1996) and Ozgen and Ufuk (1998) determined some basic values and properties, whereas, this study points out specific challenges. It also shows that the culture is evolving. The families and husbands are more cooperative and society generally accepts the women in business. However, a lack of business development and related support from the spouse continues to be evident. Recommendations The deficiency in governmental support is also evident. Many challenges can be eradicated with effective legislation and creation of enablers in the institutional and strategic levels of entrepreneurship ecosystem of Saudi Arabia as envisaged by Rahatullah (2016). For example, government can help in training the women start-ups. There is a need to have women-specific legislation to ease the burden on the female startups and to help them set up, run, and manage their businesses effectively and efficiently. 58 Journal of Women’s Entrepreneurship and Education (2016, No. 3-4, 35-65) Keeping in view Rahatullah (2013; 2016) that mapped the existing entrepreneurship ecosystem of Saudi Arabia and then mapped the evolution of the ecosystem, this study acts as a catalyst highlighting opportunities prevailing in the ecosystem for potential institutional stakeholders. The entrepreneurs must be able to exploit the services like training and development, coaching and mentoring organizations, and freelancers. There is also a need for lobbying professionals and firms to establish roots and work for the female startups growth and assistance. The universities and training institutions need to create courses in soft skills, project management, operations, basic finance and accounts, communications and branding. These organizations can also hold workshops and seminars for female startups on understanding the legal framework of the Kingdom and the prevailing business law, legal systems and procedures. The study also sheds light on need for making the venture funding procedures simpler for the female startups knowing that they are taking initiatives and need support from all the strategic and institutional stakeholders. Crowdfunding platforms could be an ideal forum for the venture funding. These platforms could take shape of equity and philanthropic types. 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