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Human Resource Management in Dubai – A National Business System Perspective

Authors:
  • Henley Business School University of Reading

Abstract and Figures

Although a sizeable body of academic literature has attempted to explain the role of national business systems in the context of human resource management (HRM), there is still little research on the extent to which institutional features explain patterns of HRM in the emerging economy of Dubai. Different institutional settings tend to generate their own organisational arrangements to manage their employees, and it is important to understand how this interplay works. From an economic perspective, Dubai is important, mainly due to its promising diversification of its economy and its political stability. From a national business system perspective, the institutional environment represents a peculiar case, because it differs from many other emerging markets with respect to the strong co-ordinating role of the state, the strong segmentation and specialisation of tasks, roles, skills and authority, especially between nationals and expatriates, and a unique employment system. Thirty-two in-depth interviews with HR managers, and extensive document reviews, reveal that these elements of the institutional environment are related strongly to specific patterns of HRM practices, including distinctive policies for national employees and expatriates. The insights generated in this study explain the particularities of HRM in Dubai from a national business system perspective.
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Accepted for publication in
The International Journal of Human Resource Management
2018
Human resource
management in Dubai
a national business system
perspective
Haak-Saheem, W. & Festing, M.
Human resource management in Dubai a national business system perspective
1
Human Resource Management in Dubai
A National Business System Perspective
WASHIKA HAAK-SAHEEM*
Associate Professor
Dubai Business School, University of Dubai
PO Box: 14143, Dubai, UAE
Tel: +971 4 5566 909
Email: wsaheem@ud.ac.ae
MARION FESTING
Professor and Chair of Human Resource Management and Intercultural Leadership
ESCP Europe
Heubnerweg 810, 14059 Berlin, Germany
Tel: 0049 (0)30 32007153
Fax: 0049 (0)30 32007189
Email: mfesting@escpeurope.eu
Accepted by the ‘International Journal of Human Resource Management’
Human resource management in Dubai a national business system perspective
2
ABSTRACT
Although a sizeable body of academic literature has attempted to explain the role of national
business systems in the context of human resource management (HRM), there is still little
research on the extent to which institutional features explain patterns of HRM in the
emerging economy of Dubai. The different social formations and regions tend to generate
their own organisational arrangements to manage their employees, and it is important to
understand how this interplay works in the specific environment of Dubai. From an economic
perspective, Dubai is important, mainly due to its increasing levels of gross domestic product,
the promising diversification of its economy and its political stability. From a national
business system perspective, the institutional environment represents a peculiar case, because
it differs from many other countries with respect to the strong co-ordinating role of the state,
the strong segmentation and specialisation of tasks, roles, skills and authority, especially
between nationals and expatriates, and a unique employment system. Thirty-two in-depth
interviews with HR managers, and extensive document reviews, reveal that these elements of
the institutional environment are related strongly to specific patterns of HRM practices,
including distinctive policies for national employees and expatriates. The insights generated
in this study are summarised in a framework explaining the particularities of HRM in Dubai
from a national business system perspective.
Keywords: National business system theory, HRM, emerging Gulf countries, United Arab
Emirates, Dubai.
Human resource management in Dubai a national business system perspective
3
Introduction
Business success across the world depends on people, or so-called human resources (see,
for example, Becker & Huselid, 2006; Pfeffer, 1996). Therefore, the management of these
human resources, including policies, practices and systems, is critical for the success of an
organisation (Noe, Hollenbeck, Gerhart, & Wright, 2014). However, the assumption that
there is a one-size-fits-all approach to effective people management is simplistic, and it is
now widely recognised that human resource management (HRM) is quite distinct in different
parts of the world (Vaiman & Brewster, 2015). The universalistic approach that has often
been applied is somewhat outdated (Farndale & Sanders, 2016), which has created increasing
requirements for HRM academics to contribute to an understanding of the many ways in
which firms in different national contexts operate effectively (Farndale & Sanders, 2016;
Sparrow, 2012).
Recent research outlines, on the one hand, how HRM practices vary according to
national context and geographic location, whilst on the other hand there is also evidence that
these differences exist not solely because some countries are more advanced than others (for
a discussion, see Brewster, 2004; Ferner & Quintanilla, 1998; Müller-Camen, Mayrhofer,
Ledolter, Strunk, & Erten, 2004; Pudelko & Harzing, 2010; Pudelko & Harzing, 2007). On
the contrary, research shows that differences in HR practices exist because actors choose
different management practices in order to achieve different objectives in divergent
circumstances (Brewster & Mayrhofer, 2012). Thus, scholars attempt to respond to the calls
for more nuanced and conceptual research on country-specific HRM, which results in an
increasing number of publications on the subject in various contexts (see, for example,
Pudelko, Reiche, & Carr, 2015; Schuler & Jackson, 2005; Sparrow, 2012; Vaiman &
Brewster, 2015; Wood, Dibben, Stride, & Webster, 2011).
Human resource management in Dubai a national business system perspective
4
The structure and practices of any economic system clearly have a decisive impact on
the ways in which organisations arrange their economic and social development (Berger &
Dore, 1996; Crouch & Streeck, 1996). This is also the case in HRM. Research has shown that
all aspects of a firm’s behaviour, including choices about HRM practices, are subject to its
institutional context (see, for example, Brewster, Wood, & Brookes, 2008; DiMaggio &
Powell, 1983; Sparrow, 2012; Wood, Dibben, & Ogden, 2014; Wood & Frynas, 2006). A
recent call for papers in a forthcoming Special Issue of the International Journal of Human
Resource Management, which underlines this notion, encourages scholars to explore issues
surrounding global trends in HRM practices and the varying extent to which they are
mediated or partially mediated by spatially confined institutional frameworks (Wilkinson &
Wood, 2015). Overall, considerable attention has been given recently to the impact of
institutions on HRM and the way in which HRM practices are embedded in a system of
transactions (Sparrow, 2012).
As Whitley (1992) notes, despite increasing transnational investment and capital flow,
considerable national variations in organisational practices persist, which has led to an
emerging body of theory considering the institutional environment, among which the
‘national business system theory’ seeks to trace similarities and differences in national
business environments and their relationship to institutional realities and organisational
practices (Whitley, 1992; Wood et al., 2011; Wood & Frynas, 2006). The national business
system theory suggests that market economy organisations can be analysed in terms of what
sorts of economic activities are co-ordinated and controlled through privately owned firms,
how market activities between economic actors are organised and co-ordinated and what
ways dominate in terms of organising and controlling activities and resources. Therefore,
national business systems are understood as the sum of organisational practices and value
orientations which characterise both the internal organisation of business units and their
Human resource management in Dubai a national business system perspective
5
relationship with the external environment (Lane, 1992a; Lane & Wood, 2009; Whitley,
1991). More relevant to the scope of this research, national business system theory considers
centralisation, co-ordination and control system, the segmentation and specialisation of
tasks, roles, skills, and the authority nature of employment relations which are critical to our
aim to explain HRM practices in Dubai.
Edwards and Ferner (2004) argue that the characteristics of a national business
system shape organisational practices through the context of generalisability and the
receptiveness of firms to adopt particular practices. Overall, the national business system
approach assumes that there are various effective and successful ways of developing
organisational practices (Räsänen & Whipp, 1992). Given the scope of our study, the national
business system framework offers an adequate platform for developing a multilevel
perspective on HRM by connecting the micro-level of individual firms’ HRM practices and
their relationship to national-level aims. While doing so, we are able to gain deep insights
into the nature of country-specific HRM practices from different angles.
Despite the fact that national business systems operate economic activities
everywhere, previous research has addressed mainly African, East Asian, European and
North American experiences (Lane, 1992b; Whitley, 1992; Witt & Redding, 2013; Wood et
al., 2011; Wood & Frynas, 2006) and has neglected the Gulf region (Afiouni, Karam, & El-
Hajj, 2013; Al Ariss, 2014), although increasing importance can be attributed to Gulf
corporation countries (GCCs), including Saudi Arabia, Bahrain, Oman, Qatar, Kuwait and the
United Arab Emirates (UAE). Huge oil and gas deposits have enabled these states to undergo
rapid economic and social development (Akoum, 2008; Kapiszewski, 2001) and to prepare
government efforts to ensure further developmental processes and to diversify their economic
foundations. The UAE enjoys a clear lead over other GCC countries in its efforts to develop
the tourism sector, accounting for 85% of total GCC investments committed to tourism-
Human resource management in Dubai a national business system perspective
6
related projects and expected to be completed by 2018 (Akoum, 2008). Furthermore,
upcoming mega events, such as Expo 2020 in Dubai or FIFA 2022 in Qatar, leverage
economic growth to the next level.
Unlike many other fast-developing markets, Dubai began its growth trajectory
without surplus labour and relied on a significant scale on expatriates, both skilled and
unskilled (Thorpe & Connell, 2013). The challenges of HRM in Dubai are special, as the
ratio of ‘nationals’ to ‘expatriates’ is among the most disproportionate in the world (see, for
example, Forstenlechner & Mellahi, 2011; Harry, 2007; Hvidt, 2009a, 2009b; Rees,
Mamman, & Bin Braik, 2007). This point is corroborated by the fact that fewer than 20% of
Dubai’s total population are local citizens, which indicates that nationals are in the minority.
According to Al-Waqfi and Forstenlechner (2014), the disparity is even more pronounced in
the private sector, where almost 99% of employees are expatriates. Therefore, the emirate of
Dubai, and companies operating in this area have to cope with particular challenges when
managing work and employment relations. This in turn makes any understanding of the
interplay between the emirate’s specific institutional regulations, including a particularly
strong role of the state and the human resource management responses of firms, not only vital
for the corporate world, but also most interesting from an academic point of view.
Therefore, the main purpose of this study is to fill the knowledge gap about the nature
of HRM in the specific institutional context of Dubai. The objective is to analyse HRM
practices in Dubai from a national business systems perspective, by focusing on research
questions on which institutional factors determine work, employment and HRM in this
specific context and identifying the underlying mechanisms of the interplay between
institutional factors, work, employment relations and HRM. The ultimate goal is to develop a
framework explaining the embeddedness of HRM practices and policies in Dubai, guided
conceptually by the national business systems perspective and based empirically on insights
Human resource management in Dubai a national business system perspective
7
from an explorative study providing empirical evidence supplied by 32 in-depth company-
level interviews and extensive document reviews. Hence, we contribute to the call for more
contextualised HRM research (Wilkinson & Wood, 2015) and advance our understanding on
comparative HRM in a non-industrialised economy.
The remainder of the paper is organised as follows. We begin by summarising a
number of insights into HRM in the Gulf region, following which a literature review on
institutionalism in general and its relationship with HRM is provided, before some
cornerstones of the national business system and HRM in Dubai follow. In the next step, we
outline the methods applied in this paper and present our findings. The discussion draws on
the broad background to the study, set in the literature review, and highlights new insights
using the lens of the national business system perspective. A conclusion, summarising the
main findings in a framework, including limitations of the study as well as implications for
future research and managerial practice, concludes the paper.
HRM in the Context of the Gulf States and Dubai
Many Gulf States exhibit greater institutional variety, and some share similar institutions;
however, no common pattern has been identified to date. For example, despite the existence
of a common federal government, the seven emirates Abu Dhabi, Dubai, Sharjah, Ras Al
Khaimah, Ajman, Umm al-Quwain and Fujairah are still governed autonomously by their
respective rulers. Therefore, in our study we focus on one particular environment, namely
Dubai, albeit we take into consideration knowledge about related cultural and institutional
constraints in the context of the Arab culture (Tayeb, 1995) and thus take a broader
perspective.
Literature focusing on HRM within the institutional environment of Gulf countries
does not yet provide the same type of rich theoretical content that is available with regard to
Human resource management in Dubai a national business system perspective
8
the Western world (see for a similar assumption and an exception Sidani & Al Ariss, 2014),
but some of the limited knowledge is summarised in this paragraph. For example, whilst
studying HRM practices in different contexts, such as in Saudi Arabia, Mellahi and Wood
(2002) highlight the critical role of the sociocultural context in shaping successful HRM
practices. Topics such as the impact of Islam and the role of national culture in the context of
HRM practices are covered (see, for example, Al-Hamadi, Budhwar, & Shipton, 2007; Ali,
2010; Aycan, Al-Hamadi, Davis, & Budhwar, 2007; Metcalfe, 2007; Tayeb, 1997).
Moreover, Mellhahi (2007) studies the impact of regulations on HRM in Saudi Arabia, while
Metcalfe (2011) outlines women’s empowerment and development in Arab Gulf states.
Furthermore, Al Waqfi and Forstenlechner (2014) examine the role of policy design and
institutional environment in determining the effectiveness of Emiratisation, and in the context
of talent management, Sidani and Al Ariss (2014) discuss the role of corporate and
institutional drivers. As these examples show, there is a gap concerning an all-encompassing
investigation of the specificities of the institutional context in Dubai and implications for the
field of HRM.
Institutional Perspectives
Institutional theories, which emerged in the 1970s, have received much attention when
emphasising the dependence of modern organisations on their environment (Meyer, 2008).
However, early research viewed institutionalisation as a process or something happens to
the organization over time (Selznick, 1957, p.16). More specifically, organisations were
supposed to be driven to incorporate the practices and procedures defined by the prevailing
rationalised concepts of organisational work and institutionalised societies. In this respect,
organisations that do so increase their legitimacy and their survival prospects (Meyer &
Human resource management in Dubai a national business system perspective
9
Rowan, 1977). Therefore, as Meyer and Rowan (1977) point out, organisational success
depends on pervasive institutional factors rather than on the efficient co-ordination and
control of production activities. Furthermore, Meyer and Rowan (1977) outline the function
of institutionalised structure as an important way of stabilising patterns of behaviour at the
organisational level. Hence, March and Olsen (1989, 1996) argue that the best way to
understand patterns of individual and collective behaviour is through the logic of
‘appropriateness’ that individuals require through their association with particular
institutions. The type of institutionalisation process in which organisational structure evolves
over time through an adaptive, largely unplanned, historically-dependent process is most
consistent with the views on institutional factors shaping organisational structure and
practices (Scott, 1987).
Institutional Perspectives and HRM
Bjorkman (2006) outlines that institutional theory had rarely been discussed in HRM research
until the work on strategic HRM (SHRM) by Wright and McMahan (1992), stating the ideas
of institutionalism may help in understanding the determinants of HRM practices (p. 313).
Since then, this theoretical approach has been used widely to investigate HRM practices
where the link between external and internal context is concerned (see, for example, Boselie,
2010; Connell & Teo, 2010). From an institutional perspective, particular HRM structures
and practices in countries exist because actors and structures are influenced and shaped by
given institutional forces (Meyer, 2008). Many different lines of thought are involved,
varying in their conception of what constitutes an actor and which properties and
environmental factors are relevant (see e.g. Aguilera, 2009; Amenta & Ramsey, 2010; Dacin,
Goodstein, & Scott, 2002; Meyer, 2008).
The institutional perspective is indeed the most dominant perspective when analysing
country-specific HRM, and it includes the national business system perspective (Whitley,
Human resource management in Dubai a national business system perspective
10
1992, 1999, 2010), different capitalism approaches (Hall & Soskice, 2001) and neo-
institutional perspectives (DiMaggio & Powell, 1991; Meyer & Rowan, 1991; Zucker, 1991).
Lane (1992a) argues that organisational goals may not differ significantly across
organisations, but courses of action taken to reach these goals do so, because action is
socially constructed and hence shaped by culture as manifested in societal institutions.
Considering context and its multi-layered and multifaceted nature makes our interpretations
of HRM and implementation more informed (Aycan et al., 2007; Schuler & Rogovsky,
1998).
Analyses of the appropriateness and effectiveness of the institutional context of HRM,
mostly in Western industrialised economies, have generated an extensive body of research
(Mellahi, 2007). For example, in European countries, researchers have examined the impact
of national business systems on HRM (Lane, 1992a; Morgan, 2007; Psychogios &
Wilkinson, 2007). One reason for choosing this approach to identify country-specific
particularities in HRM is that the main theme of national business system theory is the
comparative analysis of market economies and the factors that shape firm competitiveness,
because differences in societal institutions encourage or discourage particular types of
economic activities. Consequently, the characteristics of the firm, its pattern of organisational
practices, including HRM, and its interactions with other social actors are seen as reflecting
different models of capitalism (Whitley, 1998). In contrast to other institutional approaches,
such as varieties of capitalism, national business system theory accords much more attention
to the relative role of the state and, more specifically, the central role of the developmental
state (Whitley, 1994). This is an important perspective, as later in this paper the case of Dubai
will be at the centre of analysis.
Human resource management in Dubai a national business system perspective
11
To sum up, a considerable amount of the literature pursues the national business
system perspective to explain the link between the country-specific external environment of a
firm and its activities. However, research on the characteristics of national business systems
in the context of the emerging economies of the Gulf region is rather limited, and its link to
HRM has been neglected. At the same time, Afiouni, Rueël and Schuler (2014) emphasise
the need for further research, in order to suggest ways in which companies align their HRM
practices with their business strategies while accounting for external institutional realities
across the Arab region. Following this trend, we examine the key characteristics of the
national business system of Dubai, and explore its implications for HRM policies and
practices.
The National Business System of Dubai and HRM
To deliver a broader understanding of the interplay between the national business
system of Dubai and HRM practices, we need a more detailed analysis of the nature of those
elements of the national business system relevant to HRM. In considering the key
characteristics of a firm’s HRM structure and ways of co-ordinating HRM practices and
policies, we are concerned with the general logic governing these elements. Therefore, we
focus on the key characteristics of national business systems relevant to the scope of our
study (Whitley, 1994), specifically 1) centralisation, co-ordination and control, 2) the
specialisation of tasks, roles, skills and authority and 3) the nature of the employment system.
First, the centralisation, co-ordination and control system focuses on the hierarchal
level at which economic activities and resources are usually co-ordinated and controlled
(Whitley, 1994). In the Dubai context, the government plays an authoritarian role and
provides a strong developmental vision, a lean and efficient state apparatus, active market
Human resource management in Dubai a national business system perspective
12
interference, a reliance on market mechanisms and a pragmatic approach to economic and
social development (Hvidt, 2009a). Evans (1995) describes the interference of the
government in economic decisions for the sake of development as an embedded economy,
while its proactive role in development stresses the term developmental state a paradigm
which points to the critical role of government intervention in the country’s economy and
focuses on institutional and political bases for effective intervention (Hvidt, 2007). In a
similar vein, Niblock and Malik (2007) recognise the impact of the government on economic
decisions as state-sponsored capitalism. Unlike in all market economies, where control over
resources is decentralised to private firms (Whitley, 1994), the government takes the lead in
the emirate’s development process and controls and co-ordinates economic activities.
Whitley (1994) argues that the relationship between private firms and decision-making agents
is a significant differentiating characteristic of business systems. Therefore, this is a first
important differentiation between the Dubai system and those of other market economies. As
the empirical results will show, this has a strong and direct impact on HRM.
Second, the segmentation and specialisation of tasks, roles, skills and authority
matters (Whitley, 1994). Moreover, the overall division of labour and responsibilities
between individuals is a critical differentiating characteristic of co-ordination and control
systems (Maurice, Sellier, & Silvestre, 1986; Whitley, 1994). As indicated above, Dubai’s
population and its workforce are dominated by expatriates. From a developmental
perspective, the large proportion of expatriates creates a favourable situation with respect to
existing human capital, in that whilst other countries struggle to educate, qualify or re-
educate their people when passing through various phases of development, Dubai ‘purchases’
its workforce and their qualifications from the international labour market (Harry, 2007;
Hvidt, 2009a; Siddique, 2007).
Human resource management in Dubai a national business system perspective
13
Harry (2007) argues that whilst in most parts of the world education systems have
focused on equipping young people to take their place in the employment market as part of a
productive workforce, the GCC education system has focused mainly on developing a
national identity. The superior financial ability to import labour, as well as to purchase
technologies and knowledge, has meant that human capital development has not always been
a key priority. Moreover, despite significant and wide-scale investment, education systems
across the region have remained underdeveloped. Although the numbers of universities are
rapidly increasing, the relevance of education to the workplace has not yet improved
significantly (see also Marmenout & Lirio, 2014), and in the emirate’s primary and secondary
schooling systems, the level of higher education is lower than in the West (Harry, 2007).
Forstenlechner and Rutledge (2011) argue that the fundamentals of higher education and
research have been ignored. Furthermore, there is a certain degree of disparity between
performance and rewards for nationals, with citizenship remaining the key differentiating
factor in relation to higher wages and shorter working hours (Forstenlechner & Rutledge,
2011; Kapiszewski, 2001).
In addition, appointments to government posts, and promotions thereafter, often have
nothing to do with the subject studied or the level of achievement, thus meaning that studying
a difficult subject or working to achieve high grades does not make sense to students (Al-
Dosary & Rahman, 2005). Across GCC states, the education system is unable to nurture the
advanced technical, managerial and professional skills required by modern economies
(Kapiszewski, 2001). Therefore, Mellahi and Wood (2002) characterise the education system
as inadequate for developing an indigenous supply of skilled and qualified human resources.
However, it has to be noted that this is a risky situation for Dubai, because as the study by Al-
Dosary and Rahman (2005) has shown, neglecting educational and vocational training will
ultimately mean the failure of all attempts to reduce the amount of expatriates by replacing
Human resource management in Dubai a national business system perspective
14
them with local citizens. Forstenlechner and Rutledge (2011) therefore recognise an urgent
need to provide adequate professionalization and skills development programmes.
Third, concerning the nature of employment relations, Whitley (1994) argues that there are
considerable differences in the ways in which organisations manage employees. Employment
relations influence businesses through their structural features and the tenor of underlying
class relations (Lane, 1992a; Morgan, 2007; Whitley, 1992). And whilst in other national
contexts, unionism, collective bargaining and the call for strikes are legitimised to voice the
interests of employees, employment relations in Dubai paint a different picture.
Due to the nature of the workforce, characterised by the majority of employees being
expatriates with residence visas connected to their employment contracts and employers who
act as sponsors, unionism and collective bargaining do not exist. In the event of terminating
an employment contract, the employer must cancel or transfer sponsorship of an employee’s
residence visa and labour card (or ID card, if the employee is working in the free zones)
within 30 days of termination. Employees must also sign a final settlement form, confirming
that they have received all of their legal entitlements, before the authorities cancel their
residence visa.
According to Federal Law, Article 6, the labour department is the central body for
settling issues between employees and employers ("UAE Federal Labour Law", 1980). It
should be noted that federal labour law is complex and not applicable to every employee. For
instance, government employees or employees in free zones are exempt, and so a different set
of labour laws is relevant. Additionally, individuals working as domestic helpers or in the
agricultural sector are also exempt from federal law. In summary, it can be stated that
industrial relations are deeply embedded within the institutional context.
Human resource management in Dubai a national business system perspective
15
Methods
As outlined above, little is known about HRM approaches and their national embeddedness in
the UAE and especially in Dubai. Therefore, we believe that due to its explorative character
the qualitative approach is an appropriate methodological choice for studying HRM practices
in Dubai in the context of institutional theory. The openness of the qualitative research
methodology enables data collection that is not constrained by predetermined categories of
analysis, and thus it allows for a level of depth and detail that quantitative methods cannot
provide (Doz, 2011; Eisenhardt, 1989; Patton, 1990). Furthermore, the novelty and
complexity of HRM practices embedded within emerging Gulf countries suggests the use of
an interpretive approach, which is appropriate when the phenomena to be investigated
comprise manifold patterns of interaction that have yet to be well understood (Dixon, Day, &
Brewster, 2014). Another reason to concentrate on the qualitative approach is that in the Arab
culture a face-to-face approach is important.
Sample and Data Collection
The data for this qualitative study were drawn from a random sample of companies
representing different sectors (education, banking, healthcare, hospitality, consultancy and
others) in Dubai, as shown in Table 1. Considering the importance of ownership structures in
national business system theory (Whitley, 1999), we aimed at including companies with
different ownership structures, in order to investigate whether or not there was any variance
in HRM practices that could be attributed to various types, such as state-owned, semi-
governmental and private companies. Furthermore, we sought to include companies from
different industries in an effort to increase the likelihood of result generalisability across
industries (for more details on sample description, see Table 2). The Department of
Economic Development in Dubai (DED) provided us with a directory listing companies
established in the emirate. Having gained prior corporate approval, we made the interview
Human resource management in Dubai a national business system perspective
16
questions self-administered. Potential respondents were assured that participation was
voluntary and confidential, and the final sample size included 32 interviews generated from
the 50 firms initially approached.
In addition to data generated from the in-depth interviews, we included other
documents, such as employee handbooks or published HRM strategies, policies and/or
practices, in our research. In some cases, we had access, for example, to stored information on
employee compensation or performance management practices. As outlined by Wolff (2004),
analysis of documents can be seen as a way of contextualising information. These documents,
on organisational strategies and HRM policies and practices, were useful to deepening our
understanding. This approach provided us with a much richer basis of information for our
interpretation and gave us more certainty in our interpretations than if we had had to rely on the
interviews only. Furthermore, we analysed in detail the UAE’s labour law, in order to extend
our understanding of the judicial aspects of HRM in Dubai.
The interviews were conducted according to a specific interview protocol
developed from a previous literature review of national business systems and HRM in
general, and within the emerging Gulf countries in particular (Al-Waqfi & Forstenlechner,
2014; Al Ariss, 2014; Forstenlechner & Mellahi, 2011; Whitley, 1992, 1994; Wood et al.,
2011). For instance, respondents were asked to characterise the institutional context for HRM
in Dubai. Based on the main variables derived from the national business theory, the
questions included 1) how participants would characterise the impact of the government
policies and 2) sociocultural factors and their influence on HRM practices and in this context
3) what kind of relationship they perceive between the existing education system and HRM
policies and practices or 4) what impact the national business system has had on the specific
nature of the employment system. In addition, we asked more generally about the perceived
Human resource management in Dubai a national business system perspective
17
strengths and weaknesses of HRM practices in Dubai, the reasons for these and possible ideas
to improve them accordingly.
Interviews were carried out between December 2012 and May 2015 (for details
concerning interview partners, see Table 1). To protect identities and to ensure the
confidentiality of the individuals who participated in our study, their names are substituted by
pseudonyms.
<<Insert Table 1: Description of the Interviewees over here >>
Given the Arab culture, face-to-face interviews were preferred. The interviews lasted
between 60 and 120 minutes and were conducted in English, as this is the lingua franca for
business in Dubai (see also Rettab, Brik, & Mellahi, 2009). Ten out of the 32 interviewees
refused permission for the interviews to be recorded. In such cases, intensive notes were
taken. The other 22 interviews were recorded and transcribed. The data analysis (coding etc.)
was done in English.
Our data analysis was shaped progressively in an iterative constant comparison and
recursive interplay between rich data and emerging conceptual insights related to existing
theories, which allowed us to create new theoretical insights (Doz, 2011). In addition, our
inductive approach was more open to the richness of the phenomenon being researched than
deductive methods could ever manage (Doz, 2011).
Template Generation and Coding
This study used template analysis as a qualitative research approach (King, 2004). The
simultaneous data collection, coding and analysis enabled us to develop a template through
which the textual data set could be interpreted. As a first step, the first author developed a
preliminary coding system on the basis of five first interviews. The research team which
Human resource management in Dubai a national business system perspective
18
included the two authors and two research assistants subsequently coded 21 interviews.
Finally, the first author and one research assistant coded the remaining six interviews. The
analysis of the whole dataset then enabled the development of the final template, which was
used to draw the research insights. In this respect, interview questions presented the best
starting point in template analysis and served as higher-order codes (King, 2004). The
interviews were then used to complement, support or replace those higher-order codes and
subsequently enriched our knowledge.
In accordance with the constant comparative method (Glaser & Strauss, 1967) we
compared interviews with relevant literature, the institutional setting, the respondents’
perspectives, and the archival material. In addition one of the researchers has been living and
working in the given context for several years. Further, discussions about the interpretation of
the material with various firms’ representatives helped the authors to sharpen their focus.
More specifically, a deep level of engagement with the topic and immersion in the relevant
data occurred. Rigor refers to the resulting completeness of the data collection and analysis
(Yardely, 2000). Transparency and coherence within the analysis ensured a clear and cogent
presentation of the data and resulting findings. Finally, the notion of the theoretical and
practical impact and importance were underlying the process of quality checks. d. Although
the research team, in particular the authors agreed on the meaning of statements, in several
discussions they developed different codes for the same phenomena. Such instances were
discussed extensively to reach an agreement on coding definition. Further, relevant literature,
the institutional setting, observational notes, the respondents’ perspectives, and the archival
material were linked to the interviews, and instances in which it confirmed or negated our key
themes were noted. The team discussed such contradictions, and resolved them through
discussions with firms’ representatives. These discussions were led by the first author who
Human resource management in Dubai a national business system perspective
19
works and lives within in the UAE. We also engaged researchers who were not engaged with
the study to discuss the emerging pattern in the data and ask critical questions about methods.
These techniques were important, because the notions of reliability and validity
applied in quantitative research are not directly comparable in qualitative data (Shah &
Corley, 2006). Therefore, Linoln and Guba (1985) highlighted the notion of data
trustworthiness and furnished an alternative set of criteria by which to judge the rigor of
qualitative method: credibility, transferability, dependability, and conformability. By meeting
these criteria, we ensure the trustworthiness of our data.
Data analysis involved subdividing the data as well as assigning categories (Dey,
1993). Our codes served as tags or labels for allocating units of meaning to the descriptive or
inferential information compiled during the analysis. Codes were attached to chunks of
varying-sized words, phrases, sentences or whole paragraphs, connected or unconnected to a
specific setting (Miles and Huberman, 1994). The interviews and collected documents served
as a base from which to generate codes. Initially, we developed around 80 codes. These
included examples such as labor law, Emiratization, government, diversity, foreign workforce
or family businesses, as well as various HRM practices. Coding our data required sufficient
knowledge of the subject matter in question, to enable identification of any subtle meanings
in the data. The researchers discussed the coding scheme several times with practitioners in
the field. Based on these discussions, codes and definitions were clarified, collapsed or
extended (Campbell, Quincy, Osserman, & Pedersen, 2013). Throughout the process of
analysis we decided to drop a number of codes, in order to create a manageable body of data.
At the final stage we dealt with 38 codes. As Tesch (1990) argues, the terms ‘data
condensation’ or ‘data distillation’, as descriptions of the eventual outcome of a qualitative
analysis, imply that the body of data did not merely become smaller and manageable in the
Human resource management in Dubai a national business system perspective
20
analysis process because there was less to deal with, but was instead the result of
interpretation and organization. Thus, the underlying theory on relevant factors of the
national business systems helped to focus.
<<Insert Table 2: Sample Description over here >>
Findings
With reference to our research question, we aimed at identifying research findings concerning
the relevance of Dubai’s national business system in influencing and shaping patterns of
HRM practices. We selected the following set of HRM practices to focus on: recruitment and
selection, training and development, career management, performance management and
compensation. However, it has to be noted that any mixture of HR practices essentially
encompasses an element of selectivity (Brewster et al., 2008; Guest, 1997). Before discussing
individual HRM practices, we outline some general insights concerning the impact of the
institutional context on HRM.
The Impact of national business system on HRM in general
Our results show that patterns of HRM practices are influenced by the strategic direction of
the government. Decision-makers listen carefully, when the ruler or any other member of the
government comments or advises on any aspect of organisational practices. As highlighted in
one of the interviews:
When His Highness delivered a speech on the 43rd National Day, he outlined the
importance of preparing specialised human resources in the most modern and
Human resource management in Dubai a national business system perspective
21
complex disciplines of science. Further, His Highness advised us to follow the global
trend of digital development. The aim of the government is to move toward the
concept of the smart city. With this in mind, we have started to inform our employees
about relevant HRM topics via Twitter (Mansoor, company 28).
As our findings indicate, HRM is characterised by a strong focus on institutional forces,
such as the government plan for the future of Dubai. The Dubai Plan 2021 is a
comprehensive strategic plan guiding Dubai through its developmental path. Respondents
emphasised in the interviews the value and importance of such a document; for example, it
was reported that:
While preparing our strategic HRM objectives, we try to align these objectives to the
strategies of our government, reflected in the Dubai Plan 2021. We are blessed with
good governance and wise leadership. It is very helpful to have this sort of guidance.
(Lubna, company 27).
With reference to the role of HRM in general, another interviewee mentioned that:
Strategic HRM is critical, and we are trying to implement it in our organisation. The
Dubai Plan 2021 provides the platform. However, sometimes, we need more time to
convince the top management of what SHRM can do for their business. Unfortunately,
we are currently more administrative HRM rather than strategic. I guess we need just
more time to get there (Muna, company 6)
Another respondent referred to the Dubai Plan 2021 as follows:
The vision of Dubai is the focal point, and every single HRM-related action is involved
in it. It is all meant and well organised. Global best practices need to be streamlined to
our strategic objectives. We, as HRM professionals, have to make sure that we are
going in the same direction as our leaders (Alia, company 21).
Overall, all respondents highlighted the impact of the government on their decisions.
The Dubai Plan 2021, which was mentioned as a critical factor influencing organisational
decisions and HRM practices, describes the future of Dubai through holistic and
complementary perspectives and focuses on five key elements critical to the further
development of the emirate, namely the people, the experience, the government, the economy
and the place (www.dubaiplan2021.ae).
Furthermore, the interview partners reported the critical impact of culture on HRM
practices and policies. Another factor influencing HRM in Dubai is the role of societal
Human resource management in Dubai a national business system perspective
22
structure within culture. Although the focus of the study is mainly on the institutional context,
it is understandable and important that culture has been mentioned as an influence factor
because both, cultures and institutions are related when explaining a country-specific context,
partly because cultural values may influence institutional regulations (for the interplay see,
for example, Aycan, 2005; Farndale, 2010; or Kostova, 1999). As in the following, the
interviewee points to important religious and cultural values, which are subject to legislation
in Dubai, we have explicitly included this perspective, being related to the institutional
context:
Our cultural and traditional heritage has to be taken into consideration. According to
our religion, we prefer to be accompanied by our muhram [father, brother or husband]
while travelling abroad (Aisha, company 3).
Despite the fact that expatriates are found in nearly all kinds of jobs and their impact is
obvious, HRM in Dubai is still shaped through Islamic perspectives and principles. This
includes the situation of Arab females, who need to be accompanied when travelling abroad,
as indicated in the interview citation. However, short working hours during Ramadan (the
month in which Muslims fast) or the entitlement of Muslim employees to take part in the Hajj
(a duty of Muslims to travel to Saudi Arabia and visit Makkah) also represent examples
mentioned in the interviews.
Recruitment and Selection
As indicated in the interviews, there are two distinctive practices concerning recruitment and
selection. While the recruitment of expatriates follows international standards, there are
unique ways of recruiting UAE nationals, in that most companies prefer to recruit based on
personal relationships and/or affiliations to particular tribes or families:
We rely on personal references. Due to our environmental specifications, we want to
know whom we are hiring. We are a small community of nationals. We know each other
and this can be sometimes quite helpful (Adel, company 17).
Human resource management in Dubai a national business system perspective
23
Decision-making in recruitment and selection processes acknowledges local
governmental recommendations. For example, the role of Emiratisation is highlighted by all
interviewees, who underline that the government strategy to identify employment
opportunities for UAE nationals is reflected in the recruitment and selection of candidates,
i.e. priority is given to UAE nationals. Whilst this decision at the state level is appreciated by
nationals, expatriates fear the growing number of citizens willing and able to replace them:
Sometimes, it is unfair to select an Emirati because of his or her citizenship. We have
to make sure that priority is given to nationals. In addition, the educational
background of some of those national candidates is poor, so we have to put in a lot of
effort and train and develop them (Bernadina, company 31).
As highlighted in other interviews the recruitment of nationals is rewarded by the
federal government:
There is government support for recruited nationals. The Absher initiative is a
strategy developed by the federal government to secure employment for UAE citizens
in the private sector. The government incentivises private companies that increase the
number of nationals in their workforce. For example, training and development of
nationals can be subsidised (Berdina, company 31).
The Absher initiative (www.absher.ae) was launched to enhance the participation of
UAE citizens in the labour market, in line with the directives of Sheikh Khalifa bin Zayed Al
Nahyan, President of the UAE. It aims at establishing an overall strategic framework to
employ UAE citizens under one clear and comprehensive framework, in accordance with
UAE Vision 2021, which will enhance the skills and participation of local citizens in the
labour market. By creating more job opportunities for UAE citizens, it will boost the
competitive advantage of the national economy while simultaneously enhancing the socio-
economic and professional standards of Emiratis and diversifying their career options.
Human resource management in Dubai a national business system perspective
24
Training, Development and Career Management
As noted above, the demographic characteristics of the workforce may require a distinctive
approach to training and development. The education and human development of nationals
were outlined as major concerns across the interviews. It was reported that companies also
invest in the training and development of expatriates; however, this investment is short term
in nature, as it follows a strong focus on immediate organisational needs. The development of
nationals goes beyond the short-term objectives of employers:
We look at best practices nationally and worldwide. In the year of Emiratisation, we
aim to contribute as well. We believe in developing our people. We develop Emiratis
far beyond our specific organisational need. We understand this investment as
responsibility towards our country (Haitham, company 1).
The development of UAE nationals is also reflected in various government
programmes. It was reported that the basic and higher education of nationals is sponsored,
graduate and postgraduate education abroad may be paid for as well and certain schools and
universities practice the exclusive enrolment of Emiratis. In this respect, respondents referred
to The Sheikh Mohammed Establishment for Young Business Leaders, a government-
sponsored leadership development programme offered to talented Emiratis. As observed
across the cases, training and development is seen as a crucial HRM practice especially in
connection with the development of nationals. Accordingly, nationals who wish to establish
their own business are also supported by the government:
We have two different types of leadership programmes. The first one is accessible to
the majority of our employees. The second one is only available to our national
employees. It aims to prepare those national potentials for future leadership positions
(Alia, company 29).
Performance Management and Compensation
Human resource management in Dubai a national business system perspective
25
As stated by the interviewees, performance management is new to the region. Given the
collectivistic culture, performance management of individuals is a general challenge across
organisations. Furthermore, respondents outlined the novelty of this topic and the fact that
locally developed performance management systems do not exist at present; instead, in order
to implement an appropriate method, firms prefer the acquisition of ready-made’ concepts:
The implementation of our performance management system was supported by a
global HR consultancy firm. We had good experiences with this firm and plan to
continue our collaboration (Israa, company 22).
In addition to the limited attention directed towards the peculiarities of this region, the
dominance of international standards provided by international consultancy firms is
acknowledged by the HR professionals with some concern:
A compensation system is in place. We benchmark against the best practices outlined
by the consultancy firm. I do not like the idea, because the full power is with that
company (Harith, company 13)
With respect to cultural context, it was reported that colleagues perceived themselves as
‘friends’, and friends do not criticise one another’s performance:
It is very difficult to train our line managers on performance management reviews.
Often, they do not feel comfortable revising critically the performance of team
members who are often their friends (Mohammed, company 19).
Similar to performance management, the compensation system is well defined across
cases. The distinct approach of compensating nationals and expatriates was one of the central
themes among the interviews. In particular, HR managers highlighted the differences
between these two target groups:
As a common practice we pay higher salaries to nationals. In some cases, nationals
receive more attractive compensation packages through less working hours (Hadi,
company 30).
With reference to organisational specification, such as ownership structure, industry
or size, the compensation system may vary; however, it should be stated here that UAE
Human resource management in Dubai a national business system perspective
26
nationals are able to negotiate higher wages and additional allowances on the basis of their
citizenship.
Discussion
The investigation of the national business system in Dubai exhibited distinctive ways of
organising HRM practices and policies and identified key differences compared to much of
the existing research on HRM in other institutional contexts (Whitley, 1994). Our findings
confirm that the government not private firms co-ordinates and controls the ways in
which HRM is structured and organised. Moreover, the alignment of strategies with
government policies encourages firms to develop a long-term commitment to HRM policies
such as the employment of nationals. Through their links to government, firms can streamline
their HRM strategies to the needs of a developmental state, without falling apart. In such an
economy, where large numbers of firms depend greatly on the state for investment, co-
ordination and access to financial resources, decision-making and co-ordination are more
centralised, because this is a major source of risk and uncertainty in the path of economic
development (see e.g. Meyer & Peng, 2005; Meyer & Peng, 2015). In other words, patterns
of HRM practices in Dubai need to be more adaptable to central priorities, as is the case in
other emerging economies such as, for example, South Korea (Amsden, 1989).
Thus, the close links between the government and firms are likely to enhance the
prestige and reputation of management competencies and support them to access networks of
elites. However, the close connection to the government bears several risks. In the following
section we will detail this notion further by coming back to the three major HR-relevant
aspects of a national business system identified in the literature review.
The first issue addresses the centralisation of co-ordination and control systems,
including the strong role of the state. Managing people might become a more political rather
Human resource management in Dubai a national business system perspective
27
than an efficient agenda to the organisations. In developing HRM practices and policies,
firms seek to maintain good relations with political executives; indeed, in such a business
system, HRM practices are implemented to attract the attention and support of the
government and to create legitimacy according to the local context. However, the high level
of state co-ordination does certainly decelerate the competitiveness of such firms in a global
context. Related to this idea is the high centralisation of decisions within companies, as firms
aim at ensuring that HRM practices and polices follow centrally determined strategies. This
attribute of the Dubai business system has a considerable negative impact on the creativity
and innovation potential of firms (Dayan, Zacca, & Di Benedetto, 2013), and it has the
potential to negatively influence the competiveness of HRM practices and the firm’s
performance compared to international competitors.
The second challenge points to the segmentation and specialisation of tasks, roles,
skills and authority. Here, it is important to note that HRM practices and policies vary
somewhat, based on the nationality of the employee; for example, Emiratisation, family name
or affiliation to a certain tribe might provide employment and career opportunities. These
particular characteristics certainly have an impact on firms’ choices in recruitment and
selection, training and development or compensation practices. This is underlined by the fact
that the management of UAE nationals follows centrally determined strategies such as the
Dubai Plan 2021 or the Absher initiative (www.absher.ae). Moreover, the education system
aims at developing the skills and competencies of UAE nationals as a long-term commitment
to the restrictive direction of the government. Since the state promotes and funds the
development of nationals, firms are keen to train and develop them accordingly. The
aforementioned government programmes, such as the Absher initiative (www.absher.ae),
have a direct impact on the recruitment and training choices of government, semi-government
and private firms. Further, this initiative supports nationals in improving their skills and
Human resource management in Dubai a national business system perspective
28
raising their efficiency while helping them make a smooth transition from university. While
this policy provides a chance for local citizens, it passes on other employees such as
expatriates, whose potential might be needed in the long-run for the development of the
Dubai economy. This discrimination between two employee groups is in contrast to the
diversity practices rooted deeply in institutional regulations about equal employment
opportunities in the USA or in Europe (Braddock & McPartland, 1987) .
Employing and managing expatriates creates opportunities for diversification, nd
flexibility for Dubai firms (Haak-Saheem & Brewster, 2017). Accordingly, firms respond to
market needs by recruiting talent and competencies from the international employment
market rather than developing current resources and skills (Haak-Saheem, 2016). The more
firms are forced to rely on their own resources to deal with uncertainty, the more they are
reluctant to develop HRM practices and policies that encourage long-term investments. In
other words, while firms receive support in managing nationals and developing long-term
employment relationships with this target group, the management of expatriates is more an
ad-hoc concern. This missing strategic focus can also represent a risk for a Dubai firm, again
rooted in segmentation resulting from regulations of the national business system.
With respect to the third feature, the nature of employment relations, it has to be noted
that the participation or involvement of employees is low (Suliman & Al Kathairi, 2012).
While national employees experience high job security, expatriates fear low security. As a
requirement of the business system in Dubai, terminating the contract of a national must be
justified at the labour ministry, but this is not the case for an expatriate, who, in addition,
loses their right to stay in Dubai once their contract has come to an end. In other words,
organisations cannot lay off nationals without interacting at the state level. This characteristic
of the business system in Dubai aims at creating investment in and long-term commitment to
Human resource management in Dubai a national business system perspective
29
national employees. As a negative consequence, though, state-level support is likely to be
linked to low levels of skills and contributes to reliance on the state as well, which may
hinder national employees’ acceptance of change. Hence, the development of internal
structures in Dubai’s firms has remained dependent on international best practices and is still
fragile, and management’s attachment to state-level guidelines and policies has resulted in a
dominant pattern of HRM practices across sectors. Thus, organisations strategies are only
partially comparable to those in other countries, such as the promotion of high-performance
working systems in the USA (Guest & Conway, 2001).
This exploratory study aimed at explaining the reasons for the particularities of
Dubai-specific HRM patterns, based on the national business system approach, and in this
regard we were concerned with understanding how they have emerged in such an institutional
setting. Against this backdrop, the national business system proved to be an adequate
framework for revealing a number of novel insights into our empirical investigation of how a
centralised co-ordination and control system, segmentation and specialisation of tasks, roles,
skills and authority and the work and employment relations in this institutional context shape
country-specific HRM practices.
In summary, the conceptual and empirical analysis in this paper has shown how the
distinctive institutional context displayed in the national business system of Dubai influences
and shapes the structure and establishment of patterns of HRM practice.
Our explanations contribute to the discussion on comparative HRM, with a special focus
on the emerging market of Dubai, and enrich our knowledge in this area. In summary, our
study highlights the positive aspects of interventions in HRM practices and the risks
associated with a dominant role of the state.
Limitations of the Study and Implications for Research
Human resource management in Dubai a national business system perspective
30
Although our study provides new insights into the interplay between national business
systems and HRM, its limitations cannot be denied. First, our focus on Dubai as a single
emirate may have limited the scope of our study, and so future research may explore other
nations’ institutional settings, which in turn may enhance our understanding of the
peculiarities of HRM practices. Second, although our sample is unique and includes
companies from various industries in Dubai, the total sample number of 32 is insufficient to
provide a representative overview of Dubai firms. Thus, a quantitative approach based on our
framework, including a larger sample, could be beneficial with regard to the generalisability
of findings. Third, our investigation considers only a few characteristics of the national
business system, in order to explain patterns of HRM practices. A more detailed analysis, in
which factors inhibit their occurrence, may therefore deliver more robust results. Moreover, a
more in-depth analysis of expatriation management practices in the context of Dubai might
also make a valuable contribution to the respective string of literature.
Future research may also benefit from investigating the influences of national
business systems in other emirates, autonomous cities or Gulf countries, and address the still
existing research deficit, in order to assess whether common features such as natural
resources, geographical location or political systems contribute to the emergence of similar
business systems and are associated with the same country-specific features of HRM
practices found in this study. In the case of high similarities between Gulf countries, the
result could be a region-specific framework outlining the particularities of HRM in this
region. Whilst this was not the core objective of this study, it could be an interesting part of
any future study.
Managerial Implications
Human resource management in Dubai a national business system perspective
31
The findings of this study have important managerial implications. The merging of research
and professional expertise has had a crucial impact on the development of HRM-relevant
policies and procedures (Sparrow, 2009). This perspective becomes even more vital in a
regional context characterised by limited theoretical knowledge and practical expertise
(Afiouni et al., 2013), which is true not only for Dubai-based organisations, but also for
multinational enterprises working in the emirate.
Drawing on our in-depth interview results and intensive document reviews, we have
assessed the ways in which HRM practices are shaped by the national business system. Co-
ordination of HRM practices is shaped mainly by the government; however, the next question
is: What can be done to improve HRM practices, to ensure societal and economic
development (Sidani & Al Ariss, 2014; Thorpe & Connell, 2013)? While from a national
perspective it clearly makes sense to develop the Emirati as important players in the
employment system, passing on non-citizens also creates some form of risk, and so it may not
be sufficient to provide a sophisticated educational system to only a small portion of the
population the national elite but to all employees. HRM practices such as training and
development might need to become common themes in organisations. Moreover, firms might
benefit from developing policies to provide greater job security for the vast majority of
expatriates, because they may be important resources in the future economic development of
Dubai. While the legal environment is not in the hands of firms, investment in training and
development, and the recognition of all employees, most certainly is within their control.
Overall, HRM practices in Dubai are distinctive and need to be seen in light of the
peculiarities of its national business system. Furthermore, practitioners and policymakers
might gain knowledge of how to align HRM patterns with strategic objectives and thus
Human resource management in Dubai a national business system perspective
32
ensure further growth and development. These might be extremely useful lessons for
comparable institutional settings.
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... This cultural dimension motivates people to place their tribe above other community rules and legal requirements (Mellahi and Wood, 2001;Moideenkutty et al., 2011;Alzeban, 2015;Clarke et al., 2019) and is anticipated to influence corporate business and economic activities (e.g. Ali, 1993;Mellahi and Wood, 2001;Bellingham and Gibson, 2016;Harbi et al., 2017;Wilkins and Emik, 2021;Haak-Saheem and Festing, 2020). Although these studies provide some insights into tribal culture, they paint an incomplete picture of its effect on corporate policies because it is unclear whether the tribe has an impact on FRQ. ...
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