The Middle East, particularly the Arabian Gulf, has experienced a notable escalation in international direct investment. Find out about the potential risks that companies might encounter.
Working on adjusting to local traditions is important however adequate for successful integration. Integration is a loosely defined concept involving a lot of things, such as appreciating regional values, learning about decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, effective business affairs tend to be more than just transactional interactions. What affects employee motivation and job satisfaction vary significantly across countries. Therefore, to truly incorporate your business in the Middle East a couple of things are essential. Firstly, a corporate mindset shift in risk management beyond monetary risk management tools, as consultants and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably recommend. Next, methods that may be efficiently implemented on the ground to translate this new strategy into practice.
Although political uncertainty generally seems to take over media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become more and more attractive for FDI. Nonetheless, the present research on how multinational corporations perceive area specific dangers is scarce and frequently does not have depth, a fact attorneys and risk specialists like Louise Flanagan in Ras Al Khaimah may likely be aware of. Studies on dangers associated with FDI in the area tend to overstate and mostly focus on governmental risks, such as for example government uncertainty or policy changes which could affect investments. But lately research has started to shed a light on a a critical yet often overlooked factor, namely the consequences of cultural facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of businesses and their management teams considerably underestimate the impact of cultural differences, due mainly to deficiencies in understanding of these social factors.
Recent scientific studies on risks associated with foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge regarding the danger perceptions and administration techniques of Western multinational corporations active widely in the area. For instance, research project involving several major worldwide businesses in the GCC countries unveiled some interesting data. It suggested that the risks associated with foreign investments are a great deal more complex than simply political or exchange rate risks. Cultural risks are regarded as more essential than political, economic, or financial risks based on survey data . Additionally, the study discovered that while elements of Arab culture strongly influence the business environment, numerous foreign firms find it difficult to adjust to local customs and routines. This trouble in adapting is really a risk dimension that needs further investigation and a big change in exactly how multinational corporations operate in the region.