The role of personal connections Wasta on early-stage entrepreneurial orientations: empirical evidence from Saudi Arabia

Abstract

Wasta (Nepotism) is a controversial concept and practice used in the Arab world, which is an informal networking style. A good number of studies have been published in this field, but concerning Wasta in relation to entrepreneurial orientation, “EO” is very limited. Based on institutional theory, this quantitative research aims to analyze the relationship between Wasta from the provider and receiver sides as an informal institution and the EO of entrepreneurs in three main regions of Saudi Arabia. Using the STATA program, Exploratory Factor Analysis and Multilevel regression models were applied to test the study propositions with a sample of Saudi early-stage entrepreneurs. Results reveal two significant findings: (1) the respondents in the Western region of Saudi tend to have a significant relationship with Receiving Wasta Activities as an independent factor and EO dimensions in terms of Innovativeness and Proactiveness, Autonomy and Risk-taking, while respondents in the Central region, only found to be significant with Autonomy and Risk-taking; and (2) the evidence shows that Competitive Aggressiveness, was only found to be significant in Providing Wasta Activities. This study contributes to the current knowledge by empirically finding the significant relationship between Wasta activities from the provider and receiver sides and the four dimensions of OEs amongst early-stage entrepreneurs in Saudi Arabia. The findings also are significant for policymakers and organizations to advocate their communication and networking channels. Limitations and future research lines are discussed.