As the Middle East turns into a more appealing location for FDI, understanding the investment risks is increasingly important.
Working on adjusting to regional culture is essential however sufficient for successful integration. Integration is a loosely defined concept involving many things, such as appreciating local values, understanding decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, effective business interactions tend to be more than just transactional interactions. What affects employee motivation and job satisfaction vary greatly across cultures. Thus, to genuinely integrate your business in the Middle East a few things are essential. Firstly, a corporate mindset shift in risk management beyond economic risk management tools, as specialists and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Next, techniques that can be effortlessly implemented on the ground to convert the new mindset into action.
Although political uncertainty appears to dominate news coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a steady upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly appealing for FDI. Nevertheless, the prevailing research on how multinational corporations perceive area specific risks is scarce and often does not have depth, a well known fact attorneys and danger professionals like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on risks connected with FDI in the region have a tendency to overstate and predominantly pay attention to governmental risks, such as for instance government instability or policy modifications that could impact investments. But recent research has begun to illuminate a vital yet often overlooked factor, specifically the consequences of cultural facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their management teams notably disregard the effect of cultural differences, mainly due to too little understanding of these social variables.
Recent scientific studies on dangers associated with international direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge regarding the risk perceptions and administration strategies of Western multinational corporations active extensively in the region. For example, research project involving a few major international businesses within the GCC countries revealed some fascinating data. It argued that the risks connected with foreign investments are far more complicated than simply political or exchange rate risks. Cultural risks are perceived as more essential than political, monetary, or financial risks based on survey data . Additionally, the study discovered that while elements of Arab culture strongly influence the business environment, many foreign businesses find it difficult to adapt to regional traditions 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.