Recent research shows the significant role that cultural differences play in the success or of foreign investments in the Arab Gulf.
Recent scientific studies on risks associated with foreign direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge about the danger perceptions and management methods of Western multinational corporations active extensively in the region. For example, a study involving a few major international businesses within the GCC countries revealed some fascinating findings. It suggested that the risks associated with foreign investments are much more complex than just political or exchange rate risks. Cultural risks are regarded as more important than governmental, financial, or financial risks according to survey data . Also, the research discovered that while elements of Arab culture strongly influence the business environment, many foreign businesses struggle to adjust to regional customs and routines. This trouble in adapting constitutes a risk dimension that will require further investigation and a change in just how multinational corporations operate in the area.
Focusing on adjusting to local traditions is essential although not enough for successful integration. Integration is a loosely defined concept involving several things, such as appreciating regional values, understanding decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, successful business connections are more than just transactional interactions. What affects employee motivation and job satisfaction differ significantly across countries. Therefore, to seriously incorporate your business in the Middle East two things are essential. Firstly, a business mind-set change in risk management beyond financial risk management tools, as professionals and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Next, strategies that can be efficiently implemented on the ground to translate the new mindset into action.
Although political instability generally seems to dominate media coverage regarding the Middle East, in recent years, 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 more and more attractive for FDI. However, the existing research on how multinational corporations perceive area specific risks is scarce and often does not have insights, a well known fact solicitors and danger professionals like Louise Flanagan in Ras Al Khaimah would probably know about. Studies on dangers connected with FDI in the area have a tendency to overstate and mostly pay attention to governmental dangers, such as for example government uncertainty or policy modifications that may influence investments. But lately research has begun to shed a light on a a crucial yet often overlooked aspect, particularly the consequences of social facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of companies and their administration teams notably overlook the effect of cultural differences, due mainly to deficiencies in understanding of these cultural variables.