Risk research reports have primarily focused on governmental dangers, often overlooking the critical impact of cultural variables on investment sustainability.
Focusing on adjusting to local traditions is important yet not sufficient for effective integration. Integration is a loosely defined concept involving several things, such as for instance appreciating local values, learning about decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, successful business affairs tend to be more than just transactional interactions. What affects employee motivation and job satisfaction differ greatly across cultures. Hence, to truly incorporate your business in the Middle East a couple of things are needed. Firstly, a business mindset change in risk management beyond economic risk management tools, as consultants and solicitors such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Next, strategies which can be efficiently implemented on the ground to convert the new approach into action.
Although political uncertainty seems to take over media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable boost in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly attractive for FDI. But, the present research how multinational corporations perceive area specific risks is scarce and usually lacks insights, a fact attorneys and danger experts like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers associated with FDI in the area have a tendency to overstate and predominantly pay attention to political risks, such as for example government instability or policy modifications that could impact investments. But lately research has started to illuminate a crucial yet often overlooked aspect, specifically the consequences of cultural facets regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that lots of businesses and their management teams notably underestimate the impact of cultural differences, due primarily to a lack of knowledge of these social factors.
Recent studies on dangers connected to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge concerning the risk perceptions and management techniques of Western multinational corporations active widely in the area. For example, research project involving a few major international companies in the GCC countries unveiled some fascinating data. It argued that the risks related to foreign investments are a great deal more complex than just political or exchange rate risks. Cultural risks are regarded as more essential than governmental, financial, or economic risks based on survey data . Additionally, the research found that while aspects of Arab culture strongly influence the business environment, many foreign companies find it difficult to adjust to regional traditions and routines. This difficulty in adapting is really a risk dimension that requires further investigation and a big change in exactly how multinational corporations run in the region.