The Middle East, particularly the Arabian Gulf, has experienced a notable upsurge in international direct investment. Find out about the risks that businesses might encounter.
Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge concerning the risk perceptions and administration techniques of Western multinational corporations active extensively in the area. For instance, research project involving several major worldwide businesses in the GCC countries revealed some interesting data. It suggested that the risks connected with foreign investments are much more complex than just political or exchange price risks. Cultural risks are regarded as more important than governmental, financial, or financial risks according to survey data . Moreover, the research discovered that while elements of Arab culture strongly influence the business environment, numerous foreign businesses find it difficult to adapt to regional customs and routines. This difficulty in adapting is really a danger dimension that needs further investigation and a change in just how multinational corporations operate in the area.
Although governmental uncertainty generally seems to take over news coverage regarding the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. Nevertheless, the existing research on how multinational corporations perceive area specific risks is scarce and often lacks depth, a fact solicitors and danger specialists like Louise Flanagan in Ras Al Khaimah would probably know about. Studies on dangers related to FDI in the region tend to overstate and predominantly pay attention to governmental dangers, such as for instance government instability or policy changes that may influence investments. But lately research has started to illuminate a crucial yet often overlooked factor, specifically the effects of cultural facets regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their administration teams notably brush aside the impact of cultural differences, mainly due to too little comprehension of these cultural factors.
Focusing on adjusting to local traditions is necessary but not enough for effective integration. Integration is a loosely defined concept involving several things, such as for instance appreciating local values, learning about decision-making styles beyond a limited transactional business viewpoint, and looking into societal norms that influence company practices. In GCC countries, successful business affairs tend to be more than just transactional interactions. What influences employee motivation and job satisfaction differ significantly across cultures. Hence, to genuinely integrate your business in the Middle East a few things are essential. Firstly, a corporate mind-set shift in risk management beyond financial risk management tools, as consultants and solicitors such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, methods that can be effectively implemented on the ground to convert the new mindset into action.