This brief is part of the Insights @ Center for Emerging Markets, a publication focused on cutting edge ideas and advice for global leaders about emerging markets.
By Ron Berger (Bar Ilan University, Ramat Gan, Israel), Ram Herstein (College of Law and Business, Bnei Brak, Israel), Daniel McCarthy (Northeastern University) and Sheila Puffer (Northeastern University)
Social Networks in the Arab World
Research on social networks and social capital has focused primarily on China, Russia, and India, while the Arab world has received relatively less attention. Recent research sought to measure the role of social capital in Arab countries, specifically through the lens of Wasta, an Arabic term that encompasses the constructs of reciprocity (Mojamala), empathy (Hamola), and trust (Somah).
Informal social networks are essential to doing business in many countries, especially those that are emerging or transitioning economies. These networks often operate through reciprocity and even bribery to promote exchange. While some scholars view these networks in a positive light, others see them as a reflection of the circumstances predominant in most emerging market economies, where social networks can be seen as a substitute for formal institutions that influence the behaviors of executives and entrepreneurs.
The cultural foundations of Wasta are embedded in Arab societies as a result of historical and social influences. Goals are achieved through links with key persons, and the interaction typically involves one party who is structurally powerful, controls access to resources, or both. The root of Wasta is the Arab manifestation of social exchange theory in which respective obligations are specified and the parties are confident that each will fulfill their obligations based on social norms of exchange.
Mojamala (ةلمامج), the affective element of Wasta, is inherently connected to family and nepotism. This is a problem in the Arab world because it has become so widespread that norms have developed to justify it. Nepotism can lead to poor performance in many Arab firms since it discourages hiring skilled management, which limits the size and scope of the firm. Essentially, nepotism is a mechanism for families to hoard power and resources over time.
Hamola (ةلوحم) is the conative component of Wasta, referring to the level of human empathy, benevolence, and favoritism one has with another through owing or being owed favors. Hamola is the largest politico-administrative unit, and belonging to a tribe involves more than successive generations of genetic relationships. Belongingness depends upon thinking the same way, believing in the same principles, assimilating the same values and ethos, acting according to the same rules and laws, respecting the same hereditary sheikh (an “honorific title for an Arab tribe or religious leader”), living together, defending each other, and even fighting together.
Lastly, Somah (ةعسم), the cognitive component of Wasta, is intricately entwined with trust. In the Arab context, trust at the interpersonal level needs to be established before any business relationship can unfold. Trust depends on the length of the relationship, on how business is conducted, and how disputes are resolved.
Managerial Implications
- In addition to the reciprocity and empathy components of Wasta connections, trust plays a primary role in the Arab context. For Western firms seeking to build ties in Arab countries, the chief stumbling block to building effective social networks and alliances is the absence of trust. Therefore, building relationships that include reciprocity and empathy is important in negotiations because it creates a sense of trust and understanding. This can make the negotiation process go more smoothly and can help to resolve conflicts. However, building relationships takes time and effort, and may not be possible in all situations.
Original Article
Berger, R., Herstein, R., McCarthy, D. & Puffer, S. (2019). Doing favors in the Arab world. International Journal of Emerging Markets, 14(5): 916-943.
Contact
If you are interested in learning more about this work, contact Professor Puffer.
