The Middle East, particularly the Arabian Gulf, has experienced a notable escalation in international direct investment. Find out about the risks that businesses might encounter.
Pioneering studies on dangers connected to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge about the risk perceptions and administration methods of Western multinational corporations active extensively in the area. For example, research project involving several major international companies in the GCC countries unveiled some interesting data. It contended that the risks connected with foreign investments are even more complex than simply political or exchange rate risks. Cultural risks are perceived as more essential than political, financial, 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 companies find it difficult to adapt to regional customs and routines. This trouble in adapting constitutes a risk dimension that will require further investigation and a change in exactly how multinational corporations operate in the area.
Working on adjusting to regional culture is important however sufficient for effective integration. Integration is a loosely defined concept involving a lot of things, such as for example appreciating local values, learning about decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, effective business relationships are far more than just transactional interactions. What affects employee motivation and job satisfaction vary significantly across countries. Hence, to seriously integrate your business in the Middle East two things are needed. Firstly, a business mind-set change in risk management beyond monetary risk management tools, as specialists and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Secondly, techniques that may be effortlessly implemented on the ground to translate the new approach into practice.
Although political instability appears to take over news coverage regarding the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming extremely appealing for FDI. But, the existing research how multinational corporations perceive area specific dangers is scarce and often lacks insights, a well known fact solicitors and danger specialists like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks related to FDI in the region tend to overstate and mostly concentrate on political dangers, such as government uncertainty or policy modifications that may influence investments. But recent research has started to shed a light on a a crucial yet often overlooked factor, specifically the effects of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous companies and their management teams dramatically undervalue the impact of cultural differences, due mainly to a lack of understanding of these cultural factors.