Free zone business model innovation in the innovation-driven economy of the United Arab Emirates

Alkhanbouli, Ayman Rashed

Abstract

The United Arab Emirates (UAE) was established in 1971 and its first free zone (FZ) in 1985. The UAE developed into an innovation-driven economy (IDE) currently ranked as the 17th most competitive economy (among 137) according to the World Economic Forum (WEF), while its FZs have grown to 35. Moreover, for the last three consecutive years the winner of the Financial Times Global Free Zones award has been the Dubai Multi-Commodities Centre suggesting that there is also something exemplary to be studied in this context. Nonetheless, according to the WEF scores there are six aspects of the UAE competitiveness (namely institutions, higher education and training, goods market efficiency, financial market development, market size, and innovation) that are lagging behind the overall competitiveness ranking of the UAE as an IDE.

Although FZs, the developmental needs of IDEs, and of the UAE in particular have been well-documented, while business models (BMs), their innovation (BM/I) along with national and regional systems of innovation (N/RIS) and policy have been relatively well researched; their intersection has not been explored. This is the gap this research aims to fill by exploring FZ BM/I in an IDE such as the UAE. The focus of the thesis is on exploring if BM/I of the FZs in the UAE could be used to enhance the aforementioned lagging areas of national competitiveness. It is thus, to be made explicit that this thesis is not about the innovation and/or the BM/I of the firms hosted in the FZs but about the BMs of the FZs themselves.

Therefore, the key research question (KRQ) of this thesis is: Could free zone business model innovation be used to enhance the lagging areas of national competitiveness of an innovation-driven economy like the UAE?

To answer this KRQ, an innovation management perspective (including BMI, ecosystem and open system innovation, N/RIS and policy, among others) is adopted, as it helps to: establish the core elements that comprise the BM of a FZ; map the BM encountered in the UAE FZs, identify their (shared/unique) characteristics; determine the kind of BMI that has taken place; establish the elements upon which the BMI is concentrated/distributed; and pinpoint the FZ BM/I features relevant to the six aforementioned lagging areas of national competitiveness.

The research adopted a qualitative exploratory approach using face-to-face semi-structured interviews with senior managers from the organizations that own 54% of all FZs in the UAE. These data were combined with direct participant observation and a range of secondary data. The results indicate that there are two main FZ BMs, namely: conventional (hard infrastructure) and specialized (soft infrastructure), and that no new FZ BMs emerged post-2000. FZ BMIs tend to be of: i) limited complexity and ii) concentrated in few BM elements. No evidence of BMI concerted efforts targeting uncaptured values (environment, sustainability, ecosystem innovation, and the UAE development in large) was identified, although some initial efforts were noted. The implications of these findings for theory, methodology, policy, and practice are discussed, especially concerning how FZs BM/I could enhance the aforementioned six lagging areas of national competitiveness of the UAE as an IDE.

Citation

Alkhanbouli, A. R. (2019). Free zone business model innovation in the innovation-driven economy of the United Arab Emirates. (Thesis). University of Hull. Retrieved from https://hull-repository.worktribe.com/output/4222153

• Thesis Type: Thesis
• Deposit Date: Feb 21, 2020
• Publicly Available Date: Feb 23, 2023
• Keywords: Business
• Public URL: https://hull-repository.worktribe.com/output/4222153
• Additional Information: Business School, The University of Hull
• Award Date: Aug 1, 2019