Hadhramis: The Great Entrepreneurial Leaders of Arabia

Hadhramis: The Great Entrepreneurial Leaders of Arabia Dr. Nabil Sultan * sultann@hope.ac.uk Prof. David Weir ** weird@hope.ac.uk Faculty of Business and Computer Science, Liverpool Hope University, Hope Park, Liverpool, L16 9JD, UK. Abstract No one can doubt that many Arab organisations are run (to a large extent) on management principles based on Western theories. After all, many of those organisations exist in Arab countries which were under colonial rule (of one type or another) for a very long time and consequently inherited the Western culture of running a business which is largely influenced by Western theories and ethos of management and leadership. However, there is emerging evidence that some of the leaders of such organisations also employ management practices influenced largely by indigenous and religious motivations and that many have proved to be very successful leaders. For example, many Arab business leaders place great weight on personal relations and at times perform traditional management practices in order to do business. Furthermore, some of the successes of those leaders were also attributed to their conservative religious upbringing which placed great value on honesty, trustworthiness and social and moral responsibility. In this paper, we look at the subject of leadership from a different cultural perspective and in doing so we examine the experience of the Hadhrami business leaders of Arabia. The Leadership Debate

In the next section we review the research and thinking about leadership in Yemen as an example of leadership in the region more generally. Of course there are differences between countries, as well as between the rural and urban areas; but Yemen is of interest in its own right as well as from a comparative perspective. Very little has been written on the subject of leadership in modern Yemen. This is particularly more evident in the context of entrepreneurial leadership. This situation could be due to a number of factors. Firstly, most successful Yemeni entrepreneurs found success outside their own country, in places as far afield as Southeast Asia and as near as Saudi Arabia and some parts of Africa. Secondly, many of the successful large enterprises that currently exist in Yemen (especially in the north) are relatively new. Only after the 1962 revolution of North Yemen did privately-held enterprises started to grow and prosper. Thirdly, privately-owned enterprises (particularly those of large and medium sizes that emerged and thrived during the British rule) in South Yemen were nationalised (without any compensation) in 1969 by the country s Marxist regime which prohibited the establishment of any significant private enterprise. This state of affair was to last until 1990, the year of the declared unity between South and North Yemen. However, there is enough anecdotal evidence that can form the basis for exploring examples of Yemeni entrepreneurial leadership. To begin, it should be noted that the definition of what leadership is has often been problematic for both practitioners and academics (Ford, 2006, p237). Nevertheless, some generalisations seem to have emerged from this body of literature. For example, one author (Joseph Rost), collected 221 definitions of leadership ranging from the 1920s to the 1990s which, according to Ciulla (2005, p160) seem to say the same thing, that leadership is about a person or persons somehow moving other people to do something. As such, some authors criticised the main theories of leadership for being conceptualised primarily at the dyadic or dualistic (leader-follower) level where the overriding concern is with managerial effectiveness (Yukl, 1999, pp290, 295, 301; Collinson, 2005, p1420; Zoller and Fairhurst, 2007, p1333). The main concern of mainstream researchers has focused on what is it that makes an effective leader? However, persuasive answers have proved elusive and findings have been inconclusive and inconsistent (Collinson, 2005, 1423). According to Ciulla (2005, pp160-161), scholars who worry about constructing the ultimate definition of leadership are asking the wrong question. The whole point about studying leadership, according to her, is to answer this question: what is good leadership? The word good here has two senses, morally good leadership (i.e. guided by ethical principles) and technically good leadership (i.e. effective at getting the job-at-hand done). According to her, a good leader is an ethical and an effective leader who brings about good change. Authors such as Alexander and Wilson (Alexander and Wilson, 2005, pp137-156), contend that integrity and altruism are essential qualities of a responsible style of leadership. In their experience with examining thousands of managers, Alexander and Wilson recognise that the presence of integrity (at the core of which is honesty and trustworthiness) and altruism (concern for the welfare of others) in an individual can be a source of strength for addressing situations created by human behaviour (e.g. self-serving, negligence or deliberate malevolence). 2

Many of these theories and contentions that emphasise the ethical and altruistic credentials of good leadership are influenced by ancient and traditional theories of deontology (the duty to do good) and teleology (the consequences of one s actions). This notion is clearly emphasised by Ciulla (2005, p163) who argues that there is a need for both deontological and teleological theories to account for the ethics of leaders. Rost (1991, p176) argues that what is needed is a reconstruction of our understanding (as leaders and followers) of the concept of civic virtue so that our self- and group interest are bound up in the public interest. Ethical and moral corporate leaders are more likely to engage in promoting corporate social responsibility (CSR), defined as using the firm s resources to advance societal interests, Waldman and Siegel (2005, pp195-196). Examination of some of the successes of entrepreneurial leaders in Yemen suggests that ethics and altruism, as suggested by the aforementioned definitions of good leadership, might have been important factors behind those successes. However, in the Yemeni context, we contend that those leadership traits were likely to have been influenced by culture and a religiously conservative upbringing rather than the opaqueness of Western notions of deontology or teleology. Yemen as a Case Study Considering the Yemeni case in point, Islam has played an important role in establishing a long tradition of CSR and community cooperation in response to a historical heritage of neglect of social duties on the part of the state. Social responsibility is an obligation that is called for in the Quran and is in keeping with the conduct of the Prophet Mohammad (originally a trader widely known for his honesty) and the few disciples who ruled after him. According to Benthall (1999, p11) it is doubtful whether any other world religion has an equivalent to the Islamic principle that a hungry person has the right to share in the meal of one who is well fed. Moreover, Islam also places great importance on trust and honesty in dealing with one another and in trade. The Quran, in more than one place, warns against unfair trading. Beekun and Badawi (1999, pp28-29, 39) argue that, from an Islamic perspective, Muslim leaders should be honest, not because being so makes better leaders but also because they are accountable for their deeds to a very high authority: Allah. They also argue that the Quran explicitly links the concept of honesty (amanah) to leadership and quote the story of the Prophet Yusuf (Joseph) in the Quran as evidence. 1 1 The Quran reveals how Yusuf was placed, by the king of Egypt, in a responsible and leadership role (in charge of the granaries and storehouses of the kingdom) due to his trustworthiness (Yusuf, 12:54-55).. 3

Many of Yemen s entrepreneurial leaders are largely the product a conservative Islamic upbringing which characterised many of Yemen s rural areas where most of the country s entrepreneurial leaders during the first half of the 20 th and before originated. Many of those leaders saw it as their duty to provide vital public services denied to local communities by a colonial regime (as was the case in South Yemen and parts of Southeast Asia and Africa) and an autocratic and backward Imamic regime (as was the case in North Yemen before the revolution). One of the main salient characteristics of private sector Yemeni enterprises is that they tended to be owned by families, often the founders and their family members e.g. brothers, sons etc. This is by no means a Yemeni phenomenon. Almost 95 per cent of American businesses are family-owned and in Asia family dynasties control 46.6 per cent of the GDP in the Philippines, 84.2 per cent in Hong Kong and 76.2 per cent in Malaysia (Ciulla, 2005, p176). This feature tends to provide the socially responsible leaders of such organisations with the necessary flexibility and discretion needed in responding to the social obligations that present themselves. According to Roper and Cheney (2005, p99) the relative autonomy of privately-owned companies has allowed the consistent pursuit of social values, sometimes against the prevailing wisdom of financial analysts and in marked contrast to some competitors. A close examination of some of the success stories of Yemeni entrepreneurs indicates that culture, religion and the desire to address the inequalities of resource allocation and neglect by the state played an important role in their emergence as successful entrepreneurs and as leaders. The Hadhrami Phenomenon Yemenis, especially those who come from the region of Hadhramaut 2 (known as Hadhramis) had developed a reputation for being successful entrepreneurs. Hadhramis made a name for themselves as successful business entrepreneurs, particularly in Southeast Asia, Africa, Saudi Arabia and South Yemen. Sir Richard Burton, a 19 th century British orientalist, once remarked it is generally said that the sun does not rise upon a land that does not contain a man from Hadramaut (Burton, 1966, p58). Hadhramis were also famously known for their integrity and altruistic credentials which may be ascribed to their conservative Islamic upbringing. This is not surprising given that the region of Hadhramaut was historically known as an Islamic teaching centre. Furthermore, Hadhrami businessmen tended to help other emerging Hadhrami businessmen through the provision of seed capital or credit. They were also famous for their ability to resolve business disputes between them through mediation which often took place in the majlis (i.e., living room) of their designated Hadhrami sheikh (a person which commands the respect of others). They had very little need for police or courts (according to one observer in a programme about Hadhrami migration aired by the famous Arab satellite channel Al-Arabia in 2008). These meeting places also played an important role in ensuring that business was conducted fairly. For example, people who behaved inappropriately (e.g. failed to pay their debts etc.) 2 A vast region (historically famous and religiously conservative) that occupies a large part of South Yemen. 4

could run the risk of being ostracised by other Hadhrami businessmen who could refuse to do business with them. This arrangement ensured discipline and fair play. Hadhramis are believed to have begun their journey (or diaspora as is often described) to Southeast Asia in the early 18 th century; a journey which lasted to the Second World War. By the end of the 1930s, about 110,000 Hadhramis are thought to have lived in that part of the world. Out of this number, the majority (90,000) lived in what was then known as the Netherlands East Indies, present day Indonesia (Lukas, 2002, p5). In Singapore, for example, during the 19 th century they formed a powerful and influential economic elite who owned substantial swathes of land and traded in clothes and a wide range of goods such as spices and tobacco. Most importantly, they were well respected among the Malay/Muslim community for their religious piety and social responsibility which manifested itself in the building of mosques, schools and the upkeep of poor families (Bafana, 1996, p5). Such was the respect for those entrepreneurial leaders that gangsters in Singapore had a code which forbade the bothering of Arabs, while other distinguished figures ensured that they received due credit for their contributions (Albahar et al, 1996, p4). In the 1940s, the famous Al-Kaf Hadhrami family in Singapore created bequests to support the distribution of food to needy local families every Thursday or Friday (Carapico, 1998, p70). When the Al-Kaf family eventually returned to Hadhramaut in the early 20 th century, they continued their charitable behaviour such as making donations to the poor, bettering city slums, constructing roads, introducing small English automobiles (transported by camel across the plateau and assembled in the valley), building elaborate guesthouses equipped with modern furniture, food and servants (Pike, 1940, p648). Hadhramis were equally influential in Indonesia and Malaysia, whether as successful entrepreneurs, political, administrative or religious leaders. In Malaysia, the Arabs (largely of Hadhrami descent) played a prominent role in ending the Thai occupation of the sultanate of Kedah. One particular person of Hadhrami descent, Sayyid Jamal Al-Layl, was awarded in 1843 by the Sultan of Kedah for his loyalty in the struggle against the Thai by being made sultan of the newly created border state of Perlis. The Jamal Al-Layl was the only Arab family to rule a Malay state and it remains the ruling family of Perlis to the present day. Other personalities of Hadhrami descent were highly influential religious scholars such as Sayyid Muhammad Al-Aydarus (the son of a grain merchant from Java) who lived in Trengganu and Sayyid Ahmad Al-Attas who lived in Johore and was reputed to have been the first person to be appointed as state mufti (Othman, 1997, pp85-89). In Batavia (Jakarta) a group of wealthy Hadhrami entrepreneurs and property owners established in 1901 Jamiyyat Al-Khayr (Benevolent Society) whose main aim was to lay the foundation for a more modern type education styled on Western curriculum which included subjects such as mathematics, history, geography and English alongside more traditional Islamic subjects. The drive for education received a major boost in 1914 when Hadhrami merchants established the Arab Society for Reform and Guidance (Jamiyyat Al- Islah wa Al-Irshad Al-Arabiyya) which exists to this date. It comprises over one hundred 5

branches throughout Indonesia and has around fifty thousand members. Its activities include the running of kindergartens, primary and secondary schools and hospitals. The founders of this organisation saw education in languages and modern science as key to overcome the backwardness of the Islamic community and bring progress (Mobini-Kesheh, 1997, pp231-240). The Hadhrami diaspora also extended to East Africa where they established successful businesses in those regions, particularly in the retail industry which they controlled and, to a lesser extent, the wholesale and resale of the cereal trade. However, their main influence in East Africa was more in the educational, cultural and political spheres than commerce. Saudi Arabia was another destination for the Hadhrami diaspora. In 1969 Hadhramis living in Saudi Arabia were estimated to be numbering between 150,000 to 180,000 (Freitang, 1997, p320). Many of them rose to become powerful entrepreneurs such as Salim Ahmed Ben Mahfouz, Abdullah Ahmed Baqshan, Bamawada, Bakhashab and Bin Laden. The businesses established by these people employ thousands of people and continue the socially responsible Hadhrami tradition. Many of them have charities such as the Awon Foundation and Taybah Welfare Association (IRIN, 2007). However, the Hadhrami entrepreneurial spirit lived on to create wealth and prosperity in Yemen itself. After the Second World War, Aden, under British rule, underwent a rapid economic development. In the late 1950s, its port ranked fourth in the number of ships it handled after London, Liverpool and New York and its social services were more advanced than those of many European countries (Bidwell, 1983, pp81, 82). As a consequence, trade prospered and the city attracted many people from within South and North Yemen and many other parts of the world. In this vibrant economic environment, an elite of Hadhrami wealthy entrepreneurs emerged. Like their fellow Hadhramis of the diaspora, many were devoutly religious. They were highly regarded for their integrity and altruistic credentials. Hadhrami names such as Bazaraah became household names in Aden during the 1950s. They were responsible for the support of many poor Yemeni families and built mosques and schools (accessible to all people irrespective of their ethnic or country of origin) throughout the country. Conclusion There is very little research on Arab entrepreneurial leaders in any depth or scale that could give some insights into how such people lead their organisations and/or influence their social environments. In this article, business success was our yardstick for selecting leaders. The examples of Arab entrepreneurial leaders presented in this article were intended to support the centrality of ethics and altruism in good, responsible and successful leadership. Furthermore, these examples have also demonstrated, in our view, factors particular to the environment from which those leaders have originated which might have played an important role in influencing their actions such as culture and a conservative Islamic 6

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Zoller, H. M and Fairhurst, G. T (2007), Resistance leadership: The overlooked potential in critical organization and leadership studies, Human Relations, Vol. 60(9), pp1331-1360. * Dr. Nabil Ahmed Sultan graduated from the University of Liverpool with a PhD in Management in 1992 and in 1996 he received his MSc in Information Systems from the same university. After a two-year working period for the United Nations Development Program (UNDP) as Program Officer in Sanaa (Yemen) and Regional Program Officer at the Arab Bureau in New York (USA) he moved on to work as a Program Officer/Lecturer in IT and Business for the University of Liverpool s Center for Continuing Education until 1998. From 1999 he worked as a Senior Lecturer at Liverpool Hope University s Faculty of Business and Computer Science where he developed and taught many successful modules and programs and published many works. Dr. Sultan has a keen interest in Arab Gulf affairs and has provided consultancy work relating to this region to a number of businesses. ** Prof. David Weir is an experienced and highly successful Business School Professor and for 25 years a Dean, with outstanding career record in institutional leadership, teambuilding, professional leadership and program development, in UK and internationally, special research and teaching expertise in Management in the Arab Middle East, Strategic Management, Multicultural Management, Risk and Crisis management, Poetry of Management, Strong public service profile and community recognition. He has substantial highlevel industry experience at board level and as strategic consultant. As well as having a large consulting portfolio of private and public sector clients, he also considerable experience as mentor and advisor to corporate leaders as well as younger faculty and consulting colleagues. He has an impressive record of publications on the Arab Middle East and development issues. 9