LITERATURE REVIEW

Stereotyping is an indeIinite notion about a person, and/or group oI people where certain
set oI characteristics are related to them. These set oI descriptions can be positive or negative,
depending on the perceptions oI people (Lippmann, 1922).
Lippmann (1922), in his book public mind, explained that stereotypes are Iundamental
elements oI human psychology. They do not rise Irom the individual perceptions, instead, they
are the product oI our culture, and the Ilash oI our surrounding that reIlects our thinking and
what we believe we are seeing. He Iurther asserted that through this perception process we gave
rise to our heroes and perceives the devils in the society. Lippmann (1922) Iurther associated
stereotypes to the "pictures in the head," or the mental perceptions oI reality. From there the term
generalizations about a group oI people came into existence.
When stereotypes occur, prejudice also occurs. Allport (1954) explained that the
prejudice and stereo types appears as a product oI human thinking. He Iurther asserted that in
order to understand the world, we must classiIy the inIormation into mental categories. Once the
classiIication is done, we can judge the situation or people.
Stereotypes also emerge Irom personal Iears Irom other groups. For instance, people
believe that the person with mental illness is prone to violent behavior. This common belieI is
revered by the researchers that the mentally ill people have no tendency to show violent behavior
except a Iew. The stereotypes tend to associate the isolated behaviors oI one member oI a group
with the entire group (Grobman, 1990).
The stereotypes tend to diIIerentiate them Irom others, their targets usually are people
who are outside their cultural paraphernalia, Ior example, in US, not young, not white, not male,
not heterosexual, not middle class etc. the group oI people who least represent the culture oI
stereotypes are the prime victims (Fiske, 1998). According to Hamilton & GiIIord (1976)
stereotypes also exist when they correlate a group with particular characteristics.
Hamilton & GiIIord (1976) also noted the biasness on the basis oI size oI correlation. The
stereotypes perceive minorities as more negative than the majority oI group on the basis oI their
size. Many researchers claim that the complementary stereotypes support status quo to satisIy
their desires about their views and perceptions towards the world as Iair (Kay and Jost, 2003).
Stereotyping and Prejudice at work results in discrimination. The most common Iorm oI
discrimination is that the employers show unwillingness to hire migrants and minorities even iI
they have to compromise their proIit ratios (Evans and Kelly, 1991).The racists consider them
selI as Iair and un prejudiced to people and show sympathy and give support to minorities but
they oIten seed negative attitudes towards the minorities in the mind oI people. They don`t
consider themselves as racist and tries to avoid the situations where they have to take decisions
due to their racial bias (Gaertner and Dovidio, 2005).
The biasness and racial discrimination oI employers have proIound impact on the hiring
oI competent minorities with potential oI being hired. II these people are hired, they counter
unIavorable working environment and limited opportunities to grow (Frazer and Wiersma,
2001).Many theories on disparate evaluation standards explain what happens to these hired
minorities and who advances or who lags behind. Foschi (1989, 2000) explains that the
employers oIten use the characteristics like race, ethnicity, and gender to evaluate the
perIormance oI an employee.
The perIormance is also perceived by the stereotyped employers on the basis oI
comparison between within-group (Biernat and Manis, 1994; Biernat, Manis and Nelson, 1991).
The evaluators set low expectations Irom the perIormer but set high evaluation standards which
results in no employment or chances to advance (Biernat and Kobrynowicz, 1997).
When the person gets uncertain about things that appear important to him or her, then he
in such scenario, associate himselI with the social group he belongs (Mullin and Hogg, 1998). By
doing this he relies on stereotypic decisions (Bodenhausen, 1993) which lead him to
discriminating other members or group outside his social group Ior example women and
Ioreigners (Fiske, 1998; Zanna, 1994; Hewstone, 2002).

The research has indicated that the discrimination can increase under the increased
competition but no one has predicted about the ineIIicient discrimination based on diIIerences oI
perception oI people (Altonji & Bank, 1999; Coate and Loury, 1993; Haagsma, 1993; Rosen,
2003).
The diIIerent countries around the globe have diIIerent set oI belieIs, norms, cultures,
practices. The behavior oI people tends to be shaped by these Iactors. Some people show
Ilexibility towards situations while others are rigid. Their judgments are based on their belieIs
and perceptions usually which means it can be biased sometimes. The people tend to be
individualistic in their decisions and liIe practices and some cultures tend to have collectivists
whose decisions are based on the group approach.

Kingdom oI Saudi Arabia plays an important role in the world economy. It has one-IiIth
oI the world`s proven oil reserves. The economic and political situations oI many countries are
aIIected by the decisions and actions taken by Saudi Arabia (Ali, 2008). The kingdom has
revised many commercial, local, investment and labor laws. The government has introduced
eIIective judicial system in the country and expects that this will speed up the process oI
judgments related to business, investments, local laws and labor unions. These laws have
enhanced the conIidence oI various international investors in the KSA`s markets (Ali, 2008).
Large numbers oI MNC`s are operating in the country since 1940. These western managers have
utilized the services oI South and East Asian Ioreign workers who work Ior less wage rates and
are readily available Ior work. This practice has limited the exposure oI western managers to the
culture and political Irame work oI KSA (Ali, 2008).

Rees (2007) suggests that many Middle East countries rely heavily on the expatriates or
Ioreign workers to utilize them in the development projects. This emphasis can have proIound
impact on the political, economic and social conditions oI the host and home countries oI
expatriates.
The intake oI Ioreign workers in the Middle East countries started aIter the rise in the oil
prices in 1973. The GulI States underwent various developmental plans with inadequate labor
Iorce. The combined workIorce they had was only about 1.3 million (Abella 1995).The national
labor took least interest and involvement in the governmental development plans (Al Lamki,
1998; De Boer and Turner, 2008; Forstenlechner and Mellahi, 2011; Mellahi, 2007) the
government and multi-national corporations had to Iace challenges due to this (Budhwar and
Mellahi, 2007; Rees et al., 2007).

The Saudi workIorce has Iaced tremendous changes since latter halI oI twentieth century.
It was mainly due to the changed living pattern oI people and the rise oI modern economic
system in the country. Many MNC`s brought Ioreign workers in the country. The domestic labor
growth was steady at an average oI 5 in the country; Ioreign labor was still required between
the years 1975 and 1985. This increased the employment rate in the country. The domestic labor
market was numbered at 58 oI total employment in 1975. By the year 1980 the numbers
reversed and the employment oI Ioreigners had risen to 58 oI total employment in the country
(Helen, 1992).

In early 20`s to late 30`s oI nineteenth century, there was lot oI industrial and
architectural work establishments in the country. To meet the needs oI labor supply, many non-
Saudi workers were required due to labor shortage in the country (IPA, 1999).The labor
shortage, due to rapid economic growth, increased with the oil exploration programs by the GCC
countries around 40 years back. The GCC region governments have Ilexible policy towards the
Ioreign workers in these countries. The government showed lenient attitude towards the
employers who recruited these workers (Mohamed, 2002).

The employments oI Ioreign workers or expatriates in the various developmental
programs lead to mass unemployment oI local labor in the country. The local employment rate
dropped substantially leaving them behind the Ioreign workers who oIIered their services at any
given rates. The government oI Saudi Arabia took an initiative to master this disparity by
localization or Saudization program in order to create and propose jobs to its local workIorce.

The Saudi:ation (or localization) was initialized to replace the Ioreign labor Iorce with
the skilled and qualiIied local labor through proper planning and sequencing. Al-Harbi (1997)
explains that this policy Iavors domestic labor at large. This policy is based on three main
objectives (Looney 2004 in Al-Dosary and Rahman 2005) which includes increased ratio oI
employment to locals across all the sectors oI economy, to save the income remitted by
expatriates to their home countries, and reinvest that income in the development oI the country.

Al-Dosary and Masiur Rahman (2005) explains that this policy is beneIicial to reduce the
unemployment rate in the country by replacing Ioreign workers with Saudi nationals. Harry
(2007) Iurther explains the role oI government is oI major employer oI citizens throughout the
country.

ESCWA (2000) explains this policy oI Saudi Arabia as an indignity to the Ioreign labor
in order to Iavor its own people. ESCWA Iurther explains that between the year 1994 and 1999,
the jobs given to nationals were increased to 44.2. As per the Saudi policy oI national
recruitments, this ratio increased by the 2005. During this time more than 200,000 positions
Iilled by Ioreigners were given to the Saudi nationals. The government passed a law that all
business establishments will require to hire at least 25 Saudi nationals.

Research by HaIez (2009) indicated that reasonable measures have been taken to employ
the citizens oI the country as workIorce, but they represent only 0.43 as compared to the strong
private workIorce. Al Ali (2008) noted increase in the unemployment rate oI local workIorce.
This high unemployment rate, irrespective oI the highest growth rates in the Middle East, is
mainly due to the expatriates who Iilled the jobs at low wage rate and ruling bargain (Davidson,
2009).
Irrespective oI government initiatives to provide jobs to its local Saudis, the rate oI
unemployment was getting higher. There were many reasons behind this increasing rate. The
local labor was not cooperative and had high standards Ior wage rates. The Ioreign labor, on
other hand, was responsive to low wage rate and was ready to adapt their behaviors. The local
labor markets had lot oI expectations Irom the government and the private sectors.

Mellahi (2007) explained the local labor market demands about the employment oIIered
to them. The labor market, according to him, wanted incentives and job Iacilities in private
sectors. This issue was put on Iire by the cultural environment oI Saudi Arabia where the status
oI a person is measured on the basis oI his employment, type oI work, and social interactions.

The work Iorce was not motivated to perIorm their work and showed lazy behavior, had
no work ethics; whenever they Ielt like leaving they leIt the work. All these Iactors became a part
oI their identity and is Iound in various studies (Barber, 2008; Bladd, 2007; Godwin, 2006;
Mellahi, 2007; Mellahi and Wood, 2001, 2002; Rees et al., 2007) and noted by many local
journalists in the country (Al Gergawi, 2008, Al Subaihi, 2008).Further, Jones (2008) explained
their attitudes towards workplace as conIlict creating and they had attitudinal issues reported by
many studies (Budhwar and Mellahi, 2006;Harry, 2007, Mellahi, 2007).

Morris (2005) explained the perspective oI employees about their jobs. He suggested that
the Saudi nationals had certain work related expectations; they saw themselves as middle class
people and wanted jobs that meet this notion oI middle class. According to World Economic
Forum (2008) the expectations may include comIort, white collar jobs, managerial roles whether
they deserve or not, DBM Arabian GulI (2006) Iurther relayed that the retail and service
industries were not as per their aspirations.

The nationals perceive government sector as high paying sector with limited working
hours and Ilexibility lenient working practices and lot oI non-monetary beneIits as compared to
private sector organizations (Godwin 2006, Nelson 2004, Harry, 2007, Wilkins 2001).Al-Ali
(2006) Iurther explains their belieIs about career development in private sector jobs. According
to him, the nationals believe there are Iew opportunities to grow. Harry (2007) concluded that to
attract the locals, the private sector needs to re-design their wage policies and working
conditions.

The Iailure oI localization process in the country has given rise to the negative
stereotyped people (Rees, 2007). These people develop negative perceptions about the person or
a group as per their belieIs. The Saudi nationals considered the labor jobs cheap and regarded
them bad. They believed these jobs are not meant Ior them. These are slavish jobs only meant Ior
the people who are less than them in their social lives and background. Such behavior oI people
lead to vicious circle, where the companies tends to recruit people at lower wage rate under
quota systems on the positions that are not suitable to them and they cannot possibly succeed
there (Forstenlechner,2008).Moreover, the Ioreign workers are considered as dangerous, dis
loyal and political spies by these nationals (Whitley, 1993).

Dosary (2004) explains the stereotype Saudi work Iorce behaviors and characterize them
into various Iactors to explain their exclusion Irom employment in the private sector. He has
given seventeen Iactors which, according to him, are the main Iactors behind the low
participation oI Saudi workers in the private sector. These Iactors include; low command on
English language, exaggerated qualiIications, nepotism by the Ioreign managers to their own
nationals, competition with expatriates, extended working hours, government sector incentives,
high quality oI liIe does not allow them to accept low wage rates, recruitment is based on cost
cut strategies, Saudi worker`s inIlexibility towards the work and management, recruitment
policies including ease oI hiring and Iiring Ioreign workers, inIlexible Saudi nationals towards
relocation, Iollowed by Saudi nationals lack training and lack oI awareness towards the private
sector policies and working conditions.

A survey conducted in the labor market across all the employment sectors in private jobs
showed that these above mentioned Iactors have signiIicant impact on the low workIorce
participation in the private sector (Al-Ghaith and Al-Maashoug 1996). Besides these Iactors, the
Saudi nationals` preIerences Ior the governmental jobs have a deep impact on their decisions
(Dosary and Rahman, 2005; Maimani, 1989).


Even in the presence oI these issues and the stereotyped behavior oI the Saudi nationals
towards the Ioreign managers and Ioreign workIorce, the competition among national labor Iorce
in the market is very high Ior both regular and under employed people (Dosary, 2010)


The low tolerance level, low language proIiciency and other varying reasons has led to
reluctance in the private sector when employing these locals. The private sector might be
reluctant to employ them Ior varying reasons.

Nelson (2004) explained that the private sector employers have long term negative
perceptions about the nationals as less productive, and more expensive than Ioreign workers. Al-
Ali (2006, 2008) also reported that their low English Iluency and trust towards the management
is also a barrier to their participation. GulI (2007) explains that the employers consider
expatriates because oI their cheap wages rates than local labor. Morris (2005) Iurther explains
that the price oI these people is less than the national labor. The state has mandated pension to
the national employers, this has increased the payroll cost Ior these employees (Ballinger, 2007).
Harry (2007) has given another reason Ior the low national participation in the private sector.
According to him, the rights given by the government to these nationals cause hindrance in their
recruitment.

The private sector is resistant to the localization eIIorts adopted by the government.
Mellahi and Wood (2001) related Iour inter linked reasons Ior their resistance towards these
eIIorts. According to them, the reasons include cost oI labor, perceptions oI people in the domain
oI society and culture that inIluence the private sectors and aIIect the recruitment and retainment
oI these people, the level oI discipline and control and the Iailure to adapt the multi-cultural work
environment. Mellahi and Wood (2001: 147) Iurther argue that' the highly interventionist nature
oI the Saudi economy has resulted in a large number oI locals having less skills and work ethics
and, possibly, productivity, than their relatively privileged status would suggest. Which in other
words means that hiring and retaining an expatriate is more proIitable to the organization than
hiring local workIorce.

Mellahi and Wood`s argument is Iurther nurtured by eight important concerns to private
sector organizations. These includes, lower wage rates oI Ioreign workers as compared to Saudi
national, job training to these people as compared to the Saudis, Ilexible behavior oI the Ioreign
workIorce in comparison with Saudis in terms oI time and location (Al-Meer 1991),unIocussed
and unstable attitude oI Saudi workers compared to expatriates, ease oI hiring Ioreign labor (Al-
Qattan 1987), ease oI Iiring the Ioreign workIorce iI their perIormance is not up to the mark (Al-
Tuwaijri 1989), the Saudis costly to hire due to the retirement plans and other beneIits as
compared to expatriates (Riyadh Chamber oI Commerce and Industry 1989), and low level oI
adaptability and acceptance by Saudi worker in comparison with Ioreign workIorce (The
Manpower Council1986). Al-Buraey (1995) explained Iurther research is been conducted to
shed light on the diIIerent aspects oI Saudi workIorce behavior.

Milliken & Martins (1996) explained that the diversity oI workIorce can be advantageous
to the company in terms oI creativity and innovation, but it can also lead to varied issues like
employee integration to one speciIic group over the others and the conIormity to organizational
groups (stereotypes).VonHipple et al.(1993) Iurther warned that, these people Iail to notice
individual diIIerences and in the context oI jobs, they can strongly cloud the thinking oI the
entire group causing them to see things through stereotyped person`s mind (Al WaqIi and Jain,
2007). Allport (1954) asserted that the positive interaction between the members oI groups can
improve their inter group relations and can reduce the negative stereotyped behaviors.

The World Bank suggested various strategic approaches Ior the nationalization within the
country. These approaches are; nationalization on board, localizing the key sectors and
emphasizing control across the nation (Dosary, 2004).

Looney (2004) explains that Irom mid-nineties, there are several eIIorts conducted in the country
Ior localization. The eIIorts were mainly to increase the Saudi manpower annually, reduced
number oI Ioreign workers and nationalization oI banking sectors. According to MEED (2007)
the government oI Saudi Arabia has set certain percentage Ior diIIerent industries and positions.
For instance, the percentage set by the government Ior contracting company is 5
(ArabreIorm.net 2009) and 10 percentage is set Ior the nationals in the gold industry (MEED,
2007).
The process oI localization works with the quota system set by the government or the
bans imposed on the expatriates (Al-Dosary and Rahman 2005).Shah (2006) Iurther explained
that there are diIIerent policies and their eIIects on the supply and demand Ior workers.
Forstenlechner (2008) asserted that the punishment and visa application systems have improved
the level oI opportunities that ensures the integrations oI these nationalization processes.

The government relies on General Organization Ior Technical Education and Vocational
Training (GOTEVT) Ior the successIul implementation oI localization process in the country
(Al-Amr, 2001) but due to the lack oI clear guidance the enIorcement has not been taken
seriously in the country. The Ioreign workIorces have been continuously issued work permits
and visas (GULF 2006).Dosary and Rahman (2005) reIerred that localization process should
give importance to skill development oI Saudi nationals by educating them and giving vocational
training to them. They Iurther emphasized that the government should provide incentives on the
basis oI their work instead oI Iollowing quota system. The success oI the localization programs is
interlinked with the business sectors.

Al-Dosary and Rahman (2005) suggested that the remarkable progress has been made in
the private sector via nationalization programs. Mellahi (2007) noted that this achievement is due
to the Iear oI sanctions Irom the government, not due to they have any moral or ethical
implications. GULF (2008:2) reported that 'The decision to cut the Saudization quota Irom 30
to 20 in certain industries highlights the pressure the government is under to strike the diIIicult
balance between improving stability in the short term and creating jobs Ior its citizens in the
longer term. There seems to be slow success rate in some sectors oI the country as compared to
the success oI nationalization in banking sectors, Ior example. The success oI the localization
process in one sector can have proIound impact on other sectors as well.

Saudi government approach is by Iar laudable, but it has no long term vision, planning
and practical implementation. As per the reports presented by CIA Iact book (2011) the rate oI
unemployment in the country was 10.8 as oI 2010.

The government is hopeIul that in long run the demand and supply oI labor will be
reverse to the national labor Iorce. The government has established Human Resources
Development Fund (HRDF) to provide necessary Iunds to the qualiIying workIorce and provide
Iunds Ior their training and recruitment in the private sector. HRDF oIIers various incentives to
the employers who recruit, train and employ local workIorce. 75 per cent oI the training costs
are borne by the Human Resource Development Fund Ior training Saudi national Ior two years
(Alzalabani, 2004). Ramadi (2005) explained that despite all these eIIorts, the HRDF results are
not very pleasing.

Byars (2006) suggested that the HR policies are aIIected by the culture oI an organization
and country. The culture oI a nation includes values, belieIs, attitudes, and diIIerent behaviors oI
people that reIlect in the policies oI HRM. There are large numbers oI cultural and social barriers
in the Saudi society that are aIIecting the successIul implementation oI localization within the
country Du Plessis (2007).

Ghonemy (1998) suggested that the economy oI Saudi Arabia has transIormed into the
modern developing economy. II the government wants the localization process to be successIully
implemented then the disparity between private and public sectors must be removed in order to
attract large number oI people to work in the private sectors. Many researchers have indicated
the need oI synchronization between the public and private sectors with regard to the skill
needed Ior a job in private sector. The education system in the country is not adequate to meet
the demands oI the markets and to train the local workIorce Ior diIIering working conditions.

To change the mindset and thinking oI the Saudi people, it is required to establish career
paths to provide guidance to the people and counsel them to create awareness among them about
jobs, job training, work environment and market demand. This can only be successIul iI the
government involves the private sector. The changed thinking pattern can Iurther nurture iI the
Islamic values are cultivated among the youth oI the country by policy makers.
Islam is the religion which removes all the cultural barriers aIIecting the liIe styles and
the society oI the country. Implementing Islamic values in the society will generate positive
results and will aIIect all the people in the society (Ghonemy, 1998).

It is desirable to give preIerence to the human capital in the country. Human capital should be
the prime emphasis oI developing countries. The current challenges Iaced by the government oI
Saudi Arabia to implement the nationalization policy, a realistic and ad-hoc approach is required.

Shediac and Hatem (2010) asserted that this approach should Iocus on three main things;
Iirst, expansion oI economic activities to create more jobs Ior the people. This expansion can be
achieved in the sectors where Saudi Arabia has competitive advantage and the opportunities available
Ior its local workIorce. Second, they should reIorm the current educational system in the country to
educate the Saudi work Iorce and upgrade the labor skills by giving proper training to them to match
the market needs and requirements. Lastly, the eIIective recruitment and placement strategies should
be adopted to adjust the local labor and immigrants in the market and various other private and public
organizations. This can help signiIicantly in the improvement oI the country. II such a process and
approach is Iollowed, the localization oI Saudi Arabia will come out oI dream and become reality to
the world.







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