While the Middle East turns into a more attractive destination for FDI, comprehending the investment dangers is increasingly important.
Although governmental instability generally seems to dominate media coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a stable boost in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly attractive for FDI. But, the present research how multinational corporations perceive area specific risks is scarce and frequently does not have insights, a fact lawyers and danger specialists like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on risks related to FDI in the area have a tendency to overstate and mostly focus on political dangers, such as for instance government uncertainty or policy modifications that may affect investments. But recent research has started to illuminate a critical yet often overlooked aspect, namely the effects of cultural factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that lots of companies and their administration teams somewhat undervalue the impact of cultural differences, due mainly to deficiencies in knowledge of these cultural variables.
Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge regarding the risk perceptions and management techniques of Western multinational corporations active extensively in the area. For example, a study involving several major international companies in the GCC countries revealed some fascinating data. It suggested that the risks related to foreign investments are even more complicated than just political or exchange rate risks. Cultural risks are perceived as more important than political, monetary, or financial dangers based on survey data . Also, the research unearthed that while elements of Arab culture strongly influence the business environment, numerous foreign businesses find it difficult to adjust to local traditions and routines. This trouble in adapting is really a danger dimension that will require further investigation and a big change in exactly how multinational corporations run in the area.
Working on adjusting to local culture is necessary yet not adequate for effective integration. Integration is a loosely defined concept involving numerous things, such as for example appreciating regional values, comprehending decision-making styles beyond a restricted transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, successful business relationships are more than just transactional interactions. What influences employee motivation and job satisfaction differ significantly across cultures. Thus, to truly incorporate your business in the Middle East a few things are expected. Firstly, a business mindset shift in risk management beyond financial risk management tools, as consultants and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Secondly, strategies that can be effortlessly implemented on the ground to convert the new approach into action.