Investigating the antecedents and consequences of Saudization in the construction sector

Over time, due to the increase in the numbers of foreign workers, both the Saudi population and the rate of unemployment among Saudi workers increased sharply so the Saudi government embarked on a process of replacing the foreign workers with Saudi workers. The government was concerned that there were many young people who remained jobless on leaving university whilst, at the same time in Saudi Arabia, there were many foreign nationals who, essentially, were taking jobs meant for the local population. This study aims to investigate, on the one hand, the factors affecting the adoption of Saudization and, on the other hand, to measure the effect of the adoption on the improvement of productivity and other benefits such as improving work opportunities and job security. Previous literature shows that there were four antecedents of the adoption of Saudization. These were: government policies and regulations to encourage adoption; facilitators and incentives of adoption; knowledge-sharing practices between Saudi and non-Saudi workers and the barriers to the adoption of Saudization. In the same line, the consequences of Saudization were increased productivity and other benefits of adoption. A model was developed to conceptualise the causal relationships between the constructs and the interactions amongst these constructs. This study employs mixed methods starting with a quantitative stage which was followed by a qualitative one. A questionnaire was used to collect data from 479 Saudi Arabian construction companies. Thereafter, 16 interviews were conducted with some of these companies' managers. Structural equation modelling produced findings which revealed that, with the exception of barriers which had a negative effect on adoption, all the antecedents of the adoption of Saudization (policies and regulations, facilitators and incentives of adoption and knowledge-sharing practices) had a positive effect on the adoption of Saudization. Meanwhile, the adoption of Saudization had a positive effect on productivity and the other benefits of adoption. This study contributes to the theory since it has revealed a theoretical model which could be used in investigating the determinants and consequences of any localisation programme. It has also contributed to the practices used by the managers of construction companies and policy makers. Through identifying the antecedents and consequences of the adoption of Saudization and in parallel with preparing the required training needs to qualify Saudi’s young people, managers could deploy strategies to gradually replace foreign workers with Saudi workers. Also, this could encourage government bodies and policy makers to implement appropriate measures and incentives to encourage adoption and to reward the pioneer companies. In addition, it could help to finance training programmes and to restructure higher education to prepare qualified graduates who could fill the jobs previously taken by foreigners.