As the Middle East becomes a more desirable destination for FDI, comprehending the investment dangers is increasingly important.
Focusing on adjusting to regional culture is necessary not adequate for successful integration. Integration is a loosely defined concept involving many things, such as for example appreciating local values, understanding decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, successful business relationships are far 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 few things are essential. Firstly, a corporate mind-set change 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, strategies which can be efficiently implemented on the ground to translate this new strategy into practice.
Although governmental instability generally seems to take over media coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a stable increase in international direct investment (FDI). The Middle East and Arab Gulf markets have become increasingly appealing for FDI. Nevertheless, the existing research how multinational corporations perceive area specific risks is scarce and usually lacks insights, an undeniable fact lawyers and danger experts like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks related to FDI in the region have a tendency to overstate and predominantly pay attention to political dangers, such as government uncertainty or policy changes that may impact 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 reveal that numerous companies and their administration teams considerably underestimate the impact of cultural differences, due primarily to deficiencies in comprehension of these cultural factors.
Pioneering studies on dangers linked to international direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge concerning the risk perceptions and administration strategies of Western multinational corporations active widely in the area. For instance, research project involving several major worldwide businesses in the GCC countries unveiled some fascinating findings. It contended that the risks associated with foreign investments are a lot more complicated than just political or exchange rate risks. Cultural risks are regarded as more important 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 companies struggle to adjust to regional customs and routines. This difficulty in adapting is really a danger dimension that requires further investigation and a change in just how multinational corporations run in the area.