Click to Print

A Whole New World

In some international markets, an open mind is more important than an open wallet.
June 1, 2008
URL: http://www.entrepreneur.com/article/193666

In a global economy, cultural literacy is as critical to entrepreneurs' success as the skills and ideas they bring to the table. Rarely is this lesson as important as in Islamic nations, where Western entrepreneurs must be willing to suspend their basic understandings of business to be effective in the local marketplace.

That was clear for several members of The Entrepreneurs' Organization who recently took a trip to Saudi Arabia to join up with fellow members in the Persian Gulf monarchy.

"Nothing can prepare you for the extent to which the law, religion, culture and business environment are completely intertwined," says Adrienne Cornelsen, 39, an EO Dallas member and the president of marketing agency InSite Interactive, which projects more than $3 million in sales for 2008. She visited Saudi Arabia for the first time in January to attend a conference organized by the Arabian Knowledge Economy Association and the Saudi chapter of EO. "Islam governs every aspect of life there, including the Saudi state and economy," she says. "If you don't understand the pervasive influence of Islamic law, you'll never understand how they do business."

From a practical standpoint, operating in the global arena requires having respect for and knowledge of foreign protocols. In Saudi Arabia, the workweek begins on Saturday and ends on Wednesday, appointments are generally scheduled around five daily prayer times, and many businesses are closed in the afternoon. Most real business is conducted face to face, with far less reliance on documents and contracts than is typical in the Western world; therefore, the time it takes to do business is relative.

But many of the challenges met by entrepreneurs looking to expand their businesses in Islamic cultures go beyond protocol. Indeed, many of the basic challenges of entrepreneurship can be tougher to navigate in Islamic cultures, where there's little room for risk and less tolerance for challenging the norm. In a business culture that resists confrontation and conflict, a tough-talking, hard-charging entrepreneur would have trouble negotiating effectively.

Investment and profitability are the cornerstones of Western business. But in Islamic states, collecting or paying interest is forbidden and considered usury. Islamic contract law restricts trading on credit, promoting the belief that capital must be used for the advancement of society or for direct investments in which the debtor shares any loss or gain in the business. In an economy that permits neither business loans nor venture capital, it's essentially illegal to use money to make money. And for Western entrepreneurs, that changes the foundation of business.

To some, a culture so different appears to offer only closed doors. But Saudi Arabia presents opportunities for entrepreneurs who are nimble enough to embrace its culture. "While we shouldn't expect changes that abandon Islamic law anytime soon, the younger generation of Saudi entrepreneurs is eagerly reaching out to its Western counterparts for consultation and cooperation," Cornelsen says. "This [generation] is Western-educated and creatively working to blend the strengths of capitalistic systems with its own traditional values."

Many Persian Gulf states are looking to develop new industries and expertise independent of energy. In Saudi Arabia, the government, businesses and academia are working to promote innovation and entrepreneurship, and Saudis are eager to learn from the experiences of Westerners who have a long history of successfully growing businesses beyond their initial scope. Successful global entrepreneurs will approach new cultures with an open mind and accept differences as opportunities. With that mind-set, many doors will open, revealing a whole new world.