To most in the social enterprise field, the Middle East is not known for social innovation. The region is consistently labeled as slow, stagnant, and inflexible—not exactly qualities that foster innovation and entrepreneurship. Saudi Arabia in particular is known for its conservative, collectivist culture and fear of change. Most Saudi citizens are discouraged from starting their own businesses due to both cultural and regulatory factors. Inflexible legal frameworks, such as limited business license classifications and large capital requirements are only a few of the barriers social entrepreneurs face. Although regulatory conditions have improved in recent years, a widespread fear of failure and hesitancy towards the new and different have proved to be culturally ingrained challenges. Regardless, according to the Global Entrepreneurship Monitor, Saudi Arabia’s percent of total early-stage entrepreneurial activity is 9.4 percent, nearly twice what it was in 2009.1
Despite these barriers, there is a strong culture of volunteerism throughout the Arab world, especially among youth who are involved in community-led activism and philanthropic charities, which points to a strong potential for social enterprise. According to an online survey carried out by Bayt.com—the MENA region’s largest site for job seekers—and YouGov Siraj, with more than 12,000 residents in 18 Arab countries, 58 percent of people who wanted to start an NGO in Saudi Arabia were unable to do so due to regulatory constraints.2 While some change has already started to occur, transforming the region into a powerful hub of critical thinkers and strong leaders who challenge the status quo and youth who are encouraged to take stakes in their own futures and families has been challenging.
There is, however, a growing number of innovators throughout the region who are challenging the status quo and working to develop a new generation of leaders in the entrepreneurial field. Lulwa Al-Soudairy, an MBA recipient from Babson College in Boston, MA, co-founded Artistia.com, an online marketplace to buy and sell goods on an e-commerce platform. Artistia empowers Saudi Arabian artisans to sell their creations and encourages local production, something that is sorely lacking in Saudi Arabia, as most Saudi Arabians purchase their products from multinational name brands.3
I met with Al-Soudairy, who is currently based in Boston, to talk to her about her experience with social enterprise in Saudi Arabia. Al-Soudairy first heard about social enterprise while getting her undergraduate degree at Dar Al-Hekma, a private women’s college in Jeddah. As one of 30 students selected to take part in the U.S.–Saudi Women’s Forum on Social Entrepreneurship sponsored by Babson, she and her peers took a crash course in social entrepreneurship and received resources to help them start projects to be implemented when they returned to Saudi Arabia.
From her time in the forum, Al-Soudairy, along with a team of 13 other young Saudi women, launched a program called Reading Nation, which refurbished old vending machines and transformed them into book vending machines with the purpose of encouraging reading and an interest in literature within Saudi Arabia. Although Reading Nation still exists, Al-Soudairy chose to return to the United States to pursue her MBA in Entrepreneurship and take advantage of the resources that exist in a thriving entrepreneurship ecosystem like Boston, where she sought greater access to expertise and mentorship to help her start a business. Her most recent venture, Artistia, was launched while Al-Soudairy was completing her MBA.
As a Saudi Arabian entrepreneur, Al-Soudairy has faced a number of challenges, many of which stem from a culture skeptical of new technologies, such as online marketplaces, and an economy that is largely cash-based. The “culture of entrepreneurship is also not well understood,” says Al-Soudairy, as people do not understand why someone might leave the security of a stable job to start a small business. As a result, she states the “culture is not supportive” of entrepreneurs, something Al-Soudairy is trying to change with entrepreneurship education at universities in Saudi Arabia.
In addition to the cultural barriers that she has faced, Al-Soudairy identified a number of regulatory problems within the Saudi Arabian legal structure that make it difficult for entrepreneurs to succeed. For example, when trying to incorporate Artistia, Al-Soudairy found that Saudi Arabia does not give licenses to e-commerce businesses. As a result, despite having no need for a physical store location, Al-Soudairy must keep a physical space in Saudi Arabia for her business. This is just one example of what she refers to as a legal system that “isn’t supporting young people who are trying to do new and different things.”
According to Al-Soudairy, the existing entrepreneurship infrastructure, such as incubators and mentorship programs, doesn’t push entrepreneurs to disrupt the status quo and truly innovate. Creativity is lacking, she says, as many of the businesses that come through these programs fail to demonstrate any innovation or localization, and instead often appear to be replicates of other successful businesses.
Al-Soudairy is hopeful that the attitude towards entrepreneurship is changing, albeit slowly. She is currently working with Babson to create a university-level entrepreneurship and business program at a school in Saudi Arabia that will foster innovation through critical thinking, discussion-based coursework, and mentorship. Building a country of innovative problem-solvers is a formidable task on its own, but Al-Soudairy believes the educational shifts within institutions of higher education in Saudi Arabia are the first step in developing a strong entrepreneurial ecosystem, one in which the philanthropic motivations of Saudi Arabian people can be utilized to foster innovative and sustainable social change through entrepreneurship.
- GEM Global Entrepreneurship Monitor [online] http://www.gemconsortium.org/.
- Buckner, E., S. Beges, and L. Khatib. Social entrepreneurship: why is it important post-Arab Spring? [online] (2012) http://iis-db.stanford.edu/pubs/23656/White_Paper_Social_Entrepreneurshi....
- Damas, J. 10 Babson startups to watch in 2015. Babson Blogs [online] (2015) http://blogs.babson.edu/graduate/2014/12/23/10-babson-startups-to-watch-....