As the Middle East becomes a more desirable destination for FDI, understanding the investment dangers is increasingly important.
Although governmental uncertainty generally seems to take over media coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more appealing for FDI. Nonetheless, the prevailing research how multinational corporations perceive area specific dangers is scarce and usually lacks insights, a well known fact solicitors and risk professionals like Louise Flanagan in Ras Al Khaimah would probably be aware of. Studies on dangers related to FDI in the area have a tendency to overstate and predominantly concentrate on governmental dangers, such as for example government instability or policy changes which could impact investments. But recent research has started to shed a light on a a crucial yet often overlooked aspect, specifically the consequences of social facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that lots of businesses and their administration teams dramatically underestimate the impact of cultural differences, mainly due to a lack of knowledge of these cultural variables.
Recent studies on risks associated with foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge concerning the danger perceptions and administration methods of Western multinational corporations active widely in the region. As an example, research project involving a few major international businesses within the GCC countries unveiled some fascinating data. It suggested that the risks associated with foreign investments are far more complex than simply political or exchange price risks. Cultural risks are perceived as more important than governmental, economic, or financial risks according to survey data . Furthermore, the study unearthed that while elements of Arab culture strongly influence the business environment, numerous foreign organisations find it difficult to adjust to local traditions and routines. This difficulty 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.
Focusing on adjusting to local culture is important yet not enough for effective integration. Integration is a loosely defined concept involving many things, such as appreciating local values, understanding decision-making styles beyond a restricted transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, effective business affairs tend to be more than just transactional interactions. What impacts employee motivation and job satisfaction vary significantly across cultures. Therefore, to truly incorporate your business in the Middle East a couple of things are needed. Firstly, a business mindset shift in risk management beyond monetary risk management tools, as professionals and lawyers 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 translate the new strategy into practice.