Risk research reports have primarily concentrated on political dangers, frequently overlooking the critical effect of cultural factors on investment sustainability.
Recent scientific studies on risks connected 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 administration techniques of Western multinational corporations active widely in the area. For instance, a study involving several major worldwide companies in the GCC countries unveiled some fascinating findings. It contended that the risks connected with foreign investments are even more complex than just political or exchange price risks. Cultural risks are regarded as more important than political, economic, or financial dangers according to survey data . Also, the research unearthed that while aspects of Arab culture strongly influence the business environment, many foreign businesses find it difficult to adjust to local customs and routines. This difficulty in adapting constitutes a danger dimension that requires further investigation and a change in just how multinational corporations run in the region.
Focusing on adjusting to local culture is important although not adequate for effective integration. Integration is a loosely defined concept involving many things, such as for instance appreciating regional values, understanding decision-making styles beyond a limited transactional business viewpoint, and looking at societal norms that influence business practices. In GCC countries, successful business connections are far more than just transactional interactions. What influences employee motivation and job satisfaction vary greatly across cultures. Thus, to genuinely incorporate your business in the Middle East a few things are essential. Firstly, a corporate mindset shift in risk management beyond financial risk management tools, as specialists and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Next, techniques that can be effortlessly implemented on the ground to convert this new strategy into practice.
Although political uncertainty seems to take over news coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming increasingly appealing for FDI. However, the prevailing research how multinational corporations perceive area specific risks is scarce and usually does not have insights, an undeniable fact attorneys and risk experts like Louise Flanagan in Ras Al Khaimah would likely be familiar with. Studies on risks related to FDI in the region have a tendency to overstate and mostly focus on political risks, such as for example government instability or policy changes which could affect investments. But lately research has begun to shed a light on a a vital yet often overlooked factor, specifically the effects of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous companies and their administration teams notably brush aside the impact of cultural differences, mainly due to a lack of understanding of these cultural factors.