Recent research highlights the significant role that cultural differences play within the success or of foreign investments in the Arab Gulf.
Although political instability seems to take over news coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a steady boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become increasingly appealing for FDI. However, the present research how multinational corporations perceive area specific risks is scarce and often does not have insights, a fact solicitors and danger professionals like Louise Flanagan in Ras Al Khaimah may likely be aware of. Studies on dangers connected with FDI in the region tend to overstate and mostly concentrate on governmental risks, such as for instance government instability or policy modifications which could affect investments. But lately research has started to shed a light on a a vital yet often overlooked aspect, particularly the effects of social factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their management teams somewhat neglect the impact of cultural differences, mainly due to too little knowledge of these social variables.
Focusing on adjusting to local culture is essential although not sufficient for effective integration. Integration is a loosely defined concept involving many things, such as for example appreciating local values, comprehending decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, successful business interactions are far more than just transactional interactions. What affects employee motivation and job satisfaction differ significantly across cultures. Hence, to truly integrate your business in the Middle East two things are expected. Firstly, a corporate mind-set shift in risk management beyond economic risk management tools, as consultants and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest. Next, methods that can be effectively implemented on the ground to translate this new mindset into action.
Recent studies on risks associated with international direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge regarding the risk perceptions and management techniques of Western multinational corporations active widely in the region. As an example, research project involving a few major international companies in the GCC countries revealed some interesting findings. It contended that the risks related to foreign investments are much more complex than just political or exchange rate risks. Cultural risks are perceived as more crucial than governmental, economic, or financial dangers in accordance with survey data . Additionally, the research unearthed that while elements 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 will require further investigation and a big change in exactly how multinational corporations run in the area.