Consultative Authority Decision Making: On the Development and Characterization of Arab Corporate Culture

Abstract

Does culture make business organizations, or do business organizations make their own cultures? The question underlies all debates about the impact of national culture on corporate culture. Moreover, Inquiries into this impact have ranged in response from determining effect to shaping effect. Whether determining or shaping, analysis of the effect presupposes that the corporation is the predominant form of business organizations in a given culture. What if the predominant form were not the corporation? Indeed, it is estimated that over 90% of Arab business entities are family businesses. Consequently, the study of Arab corporate culture must take into consideration the dynamics of such pattern of ownership-management. Combined with various factors and forces characteristic of Arab-Islamic culture, this pattern of ownershipmanagement has historically shaped the development of Arab corporate culture. This paper is an attempt to propose a characterization of Arab corporate culture in the framework of analyzing the historical development of the Arab business organization as shaped by Arab-Islamic cultural factors and forces. Using methodologies of literature review and historical analysis, we will demonstrate that the strongly patriarchal and collectivist Arab-Islamic culture has historically produced what we call Consultative Authority Decision Making (CADM) model that places power and prerogatives in the hands of the individual. Unlike conventional wisdom, this model is not totally authoritarian, but it sure is far from being democratic. The first part of the paper will address the historical development of the Arab decision making model along with the cultural and religious factors that have shaped it. Meanwhile the second part will be devoted to a characterization of Arab corporate culture in light of the CADM and as shaped by Arab-Islamic cultural factors and forces.

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