An analysis of entrepreneurship characteristics in Saudi Arabia

Entrepreneurship is a critical component of growth in any society. Entrepreneurs create jobs, bring new products and services to the market, and by starting of new businesses, positively impact on the level of productivity in a sector or the economy. The aim of the paper/chapter is to provide a snapshot of the state of entrepreneurship in the Kingdom of Saudi Arabia. It also describes its key characteristics which can be considered as a strong foundation for an informed policy debate about the relationship between entrepreneurship and economic growth and help government identify what needs to be done to enhance the level and quality of entrepreneurship in the KSA.While important, the contribution of entrepreneurs to an economy also varies according to its phase of economic development. This research is framed around a model that includes a distinction among phases of economic development, in line with Porter's typology of 'factor-driven economies', 'efficiency-driven economies' and 'innovation-driven economies' (Porter, Sachs and McArthur, 2002). As previous studies have shown, necessity-driven self-employment activity tends to be higher in less developed economies. Such economies are unable to keep pace with the demand for jobs in high-productivity sectors, and so many people must create their own economic activity. As an economy develops, the level of necessity-driven entrepreneurial activity gradually declines as productive sectors grow and supply more employment opportunities. At the same time, opportunity-driven entrepreneurial activity tends to pick up with improvements in wealth and infrastructure, introducing a qualitative change in overall entrepreneurial activity.Since entrepreneurial activities vary with economic development, national policy makers need to tailor their socio-economic programs to the development context of their country.Whereas enabling entrepreneurship in factor-driven economies may be desirable, more basic requirements such as primary education are necessary and should have priority, as entrepreneurship is unlikely to contribute substantial improvements in wealth creation if basic requirements are in bad shape. Key issues emerging from the study, taking into account the level of economic development of the KSA (factor-driven economy) should serve to better inform policymakers and concerned stakeholders about what needs to be done to elevate the level of entrepreneurial activity in the KSA, and the quality, sustainability, competitiveness and growth of new businesses.