GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
Omanisation, Medium-Size Firms, and Youth Employment in Oman
Paper Proposal Text :
"Omanisation, Medium-Size Firms, and Youth Employment in Oman”

Research Project Presentation Proposal for 2016 Gulf Research Meeting

Authors/Presenters: Dr. Iram Ansari, Assistant Professor, Accounting and Dr. Jacqueline McGlade, Associate Professor of Political Science, Sultan Qaboos University

Short Abstract: Based on original data and information provided for the first time by the Director’s Office of the Muscat Securities Market (MSM), this project presentation analyzes the business and employment factors and characteristics among medium-size firms (26-99 workers and annual sales of OMR500,000-less than 3,000,000, both Omani and foreign-owned) currently operating in Oman. Identifying growth (or shrinkages) opportunities, especially in the area of Omani youth employment, in the medium size enterprise sector will weigh heavily on government decisions to assist in the expansion/revival of such firms. This study probes whether the current state assumptions that medium size firms are best positioned to act as rapid drivers of jobs creation and expansion over larger enterprises in light of market downturns tied to lower oil prices. Also, the study examines whether Omani medium-size firms have the capacity, not only for jobs expansion, but also the business and financial management capacities to attract private financing that will increasingly replace former levels of government funding support.

Dr. Iram Ansari, Assistant Professor of Accounting at Sultan Qaboos University, completed her PhD in Business Studies and Corporate Finance at the CARDIFF BUSINESS SCHOOL and she specializes in corporate financing and corporate governance of 20th-20st c. family businesses in Europe (i.e. France, Germany and the UK). She is the author with Marc Goergen, and Sevtlana Mira of “The determinants of the CEO successor choice in family firms.” (2014) Journal of Corporate Finance Vol.28, p. 6-25.
Dr. Jacqueline McGlade, Associate Professor in the Department of Political Science of Sultan Qaboos University, specializing in International Business and World Political Economic development, relations, and systems. She is the author of several publications on the impact of U.S. aid and trade programs on the re-development of post-1945 world business including “American Aims and European Re-Industrialization after World War II,” in Francesca Fauri and Paolo Tedesco, eds., The Marshall Plan and European Industry (Peter Lang Publications Fall 2011).
Expanded Abstract:

Rising Youth Unemployment Despite Omanisation:

Since its inception by Royal Decree 95/97 in 1988, the Omanisation programme has been intended to replace foreign workers and expatriates with trained Omani citizens. While the number of Omanis in government services exceeded the set target of 72% by 1999, Omanisation has lagged far behind in private business with current workforce composition rates at 47.4 per cent Omani against 52.6 per cent expatriates. While targets were also set for six industries: transport, storage and communications at 60%, finance; insurance and real estate at 45%; industry at 35%; hotels and restaurants at 30%; wholesale or retail trading at 20% and contracting at 15%, only Omani established and Islamic banks have reached such sectoral targets. A mismatch between Omani youth educational skills training and development in line with employer expectations and needs, often emanating from foreign-managed companies has been targeted as a central problem in the achievement of Omanisation labor policies and goals.
With unemployment reaching a peak in April 2015 at 11.75%, the youth un/under employment picture despite Omanisation policies remains troubling, especially in light of levels among the highest in the GCC region. As reported by the National Centre for Statistics and Information (NCSI), overall unemployment rates in age categories rest at young adults (15-29) year-old at 30 per cent with 60 per cent between 15 and 64 in age. However, when broken further by age ranges and education, Omani job seekers in the 25-34 in age range have increased year on year since 2010 with the largest rise among those with postsecondary/intermediate education rising to 58.9 per cent. While college graduates only composed 9.3 per cent of all job seekers, a February 9, 2016 survey by the NCSI revealed that Omani college graduate wait on average 3.5 years to find a job that matches their educational training and professional interests. In large part, this lag has been attributed to the long-held expectation and hold-out rates for Omani college graduates to enter public service jobs over employment in private enterprises.
These worrying youth employment figures have shaped government debates and initiates in the areas of jobs creation, manpower capacities, educational training, and business development for many years but in earnest in relation to the small and medium size enterprise (SME) sector since 2013. In the past few months, the Sultanate’s focus on SME development tied to youth-centered entrepreneurship and employment has intensified in light of current negative national revenue/budget situations that will limit public service jobs creation, if not retention, in the long as well as short-term. Reflecting an intensified drive to boost private over public jobs creation, Khalifa Al Abri, chief executive officer of the Public Authority for SME Development announced on January 26, 2016, new classification levels for micro, small and medium enterprises intended to broaden the scope and opportunities for SME growth and private financing in Oman. Despite such enthusiasm for jobs creation tied to SME development, the current state and composition of Omani youth employment in relation to small and medium firms is not known.

Research Project - Omani Medium-Sized Firms:

In order to examine the Oman medium-size business sector in detail, the authors, in partnership with the Director’s Office of the Muscat Securities Market (MSM), have secured first of a kind data reports that profile key operational and financial characteristics of the sector including: industry of operation; major product/service; listing status; size in terms of sales, total assets and no. of employees; date of establishment; ownership details; founder information (at least the name); and other statistics available for 200 companies. The authors will outline the research methodologies and goals of the project that include conducting and writing formal business case studies of participating forms and creating a searchable database with regular updates intended for academic and student researchers.
The presentation will also consider the kinds of problems/challenges/difficulties these companies face as state sources of investment/funding lessen and regional competition tightens. Also, the types of management development and/or re-structuring internal management organization/practices in order to achieve greater overall efficiencies/supply chain management and increased employment capacities. Finally, the project examines which types of companies included in the study would be the most open and/or vulnerable to potential new volatilities in public/private financing, external competition (whether Omani or foreign-based), and other business pressures, e.g. profitable pricing, commodities sourcing, new markets access, etc. in light of their position as first generation and/or family-owned firms with little accumulated long-term wealth/capital reserves.
In all, these factors and others will be critical in determining the viability of Omani medium-size firms to absorb and create job placements for young professionals and workers either constrained or unable to secure employment in traditional government and/or large-cap business enterprises. The research project also offers important insights that can be useful for Sultanate policymakers, investors and business leaders in efforts to address Omani youth employment and SME sector expansion.

Research Project Methodology:
Based on our preliminary assessment of the existing knowledge and the type of knowledge developed so far, it is apparent that little is known about the research domain in the Omani context. Hence, the applied research method will be a two-step research approach combining qualitative and quantitative methods for data collection.
In the first step, we intend to conduct about six to ten case studies of medium-sized Omani companies. Companies will be selected so that they represent a variety of sizes (within the medium-size range), ages, industries and ownership structures (i.e. fragmented versus concentrated, if concentrated then in the hands of an individual, family etc.). In this theory-building stage, we would like to consider heterogeneity as a way to better grasp the complexity of the phenomenon under study, and, as a consequence, to develop a more refined conceptual framework.
On identifying the companies for the case studies, semi-structured in-depth interviews will be conducted, both one-to-one type as well as group-level type. Given that such research has not been conducted in Oman, our approach will allow more flexibility for the interviewer to pose partially determined, open-ended questions; and will eventually provide the respondent more freedom to expand on or emphasise certain topics and to put forward opinions. We will investigate the driving forces that led to the decision of their current ownership structure, financing alternatives, their strategies on private financing in lieu of the current national budget situation, and the kinds of problems/challenges/difficulties these companies face as state sources of investment/funding lessen and regional competition tightens. A comparative analysis of the cases as we progress will lead to the general interpretive framework. Following common prescriptions for multiple case studies (e.g. Eisenhardt 1989), we will replicate the study (i.e. from six increasing to ten companies) until we have evidence that we have reached a saturation point – i.e. the marginal contribution of each additional case to the overall framework is minimal.
In the second step, we intend to use secondary data from the last ten years (2006-2015) of both qualitative and quantitative nature on all the medium-sized companies in Oman – regardless of their ownership structure or listing on the stock market. Such data include organization information, ownership and control structure, board/management information (where relevant), financial data, and performance data. The data will be gathered through collaboration with the Muscat Securities Market and the Oman Chamber of Commerce. The secondary data will be subject to statistical analysis of frequency and regression analysis (panel data techniques), in order to obtain a relative assessment of the extent of the different issues facing these companies as state funding reduces. This analysis will also help to investigate the determinants and motivations, and implications for these companies to go public or seek private financing. The two-steps of our methodology complement each other to provide a thorough understanding of the issues under study.