An examination of the impact of foreign and local managers on firm resources: A case of micro and small serviced apartments in Riyadh - Saudi Arabia

Saudi Arabia (the largest oil exporting country in the world) is making an effort to diversify its economy, to decrease their dependence on the oil sector. The tourism market in Saudi Arabia is one of the biggest in the region and one of the most profitable sectors in the Middle East. The government has made a strong effort to improve and expand the tourism sector (e.g. introducing electronic visas). Accommodation is a vital element in the tourism sector, and it is very important to a destination’s image and competitiveness. As a part of the Saudisation policy, the Government has decided to localise the managers of hotels and serviced apartments by the end of 2020. This means hotels are more likely to be managed by local managers rather than foreign managers which has been the norm in Saudi Arabia.
The Saudisation policy could have either a negative or a positive impact on firms’ performance. Riyadh is one of main cities to attract tourists and is dominated by micro and small serviced apartment enterprises. This decision might affect these enterprises since they depend on managers’ actions which, in turn, will affect the tourism industry. Therefore, it is important to investigate how local and foreign managers manage firm resources so that appropriate business support policy can be developed.
The Resource-Based View has been the dominant theory for studying the relationship between firm resources and business performance. Existing studies have investigated the impact of different entrepreneurial characteristics of managers, and general traits such as age, gender and level of education on firm resources. However, no previous study examines the impact that managers’ background (local vs foreign) has on the development of firm resources. This research will be applying the concepts of Resource-Based Theory to examine the role played by local and foreign managers on firm resources. In doing so, this study will extend the boundary of Resource-Based View framework.
To understand the different roles of local and foreign managers, it is also necessary to identify the key resources of micro and small serviced apartments. In order to accomplish this objective, existing studies related to local/foreign managers, micro and small enterprises, serviced apartments and four of the firms’ resources were critically analysed. I found that finance, human resources, technology and collaboration are critical for self-catering apartments and have a strong propensity to influence business performance. Following that, seven in-depth interviews were conducted at public institutions and nineteen interviews were conducted with local/foreign managers of micro and small serviced apartments.
This study found that local and foreign managers take different approaches in developing firm resources and also face different sets of challenges while consuming them. The findings of this study provide useful recommendations to owners and managers of micro and small serviced apartments and to policy makers.