As the Middle East turns into a more appealing location for FDI, understanding the investment dangers is increasingly important.
Although governmental uncertainty seems to dominate media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become extremely appealing for FDI. However, the existing research on how multinational corporations perceive area specific risks is scarce and often does not have depth, a fact solicitors and danger specialists like Louise Flanagan in Ras Al Khaimah would probably be aware of. Studies on risks related to FDI in the area have a tendency to overstate and mostly concentrate on political risks, such as for instance government instability or policy changes which could impact investments. But lately research has begun to shed a light on a a vital yet often overlooked factor, particularly the effects of cultural facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many companies and their management teams considerably undervalue the impact of cultural differences, mainly due to deficiencies in knowledge of these cultural variables.
Pioneering scientific studies on risks connected to international direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge regarding the risk perceptions and management methods of Western multinational corporations active widely in the region. For example, research project involving a few major worldwide businesses within the GCC countries unveiled some interesting findings. It suggested that the risks related to foreign investments are even more complicated than simply political or exchange price risks. Cultural risks are regarded as more crucial than governmental, monetary, or financial dangers in accordance with survey data . Additionally, the research found that while aspects of Arab culture strongly influence the business environment, numerous foreign organisations find it difficult to adjust to regional traditions and routines. This trouble in adapting is really a danger dimension that needs further investigation and a change in how multinational corporations run in the region.
Working on adjusting to regional culture is important but not enough for effective integration. Integration is a loosely defined concept involving numerous things, such as for instance appreciating local values, comprehending decision-making styles beyond a limited transactional business perspective, and looking into societal norms that influence business practices. In GCC countries, successful business connections are far more than just transactional interactions. What affects employee motivation and job satisfaction vary significantly across countries. Thus, to truly incorporate your business in the Middle East a few things are essential. Firstly, a corporate mind-set change in risk management beyond monetary risk management tools, as consultants and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, methods that may be effectively implemented on the ground to convert the new strategy into practice.