Workforce Localization Policies in Saudi Arabia: The Determinants of Successful Implementation in Multi-National Enterprises

Job Localization policy in Saudi Arabia (commonly known as ‘Saudization’) has passed its fourteenth year aiming at replacing foreign employees in the private sector with local employees. This research attempts to identify the determinants of localization success within Multi-National Enterprises (MNEs) in Saudi Arabia. From institutional perspective, the research evaluates the impacts of Institutional determinants, HR practices, role of HR director, and firm characteristics on localization success. The study draws its conclusion from the analysis of quantitative data collected from Human Resource Directors representing 157 MNEs. With regard to the first group of localization determinants, the results completely support the cause and control determinants while supporting only the consistency proposition in the content determinants. In regard to HR determinants, recruitment, training and the role of HR director were found to be powerful determinants of localization success. Finally, the results have shown that determinants related to MNEs’ characteristics, namely MNE size and MNE age, have no significant impact on localization success. We also found that MNEs which operate in the petrochemical sector are more likely to succeed in their localization polices than other industries, namely electronics, food, motor, paper products, real estate, business services, hotel, manufacturing, and agriculture industries.