As the Middle East becomes a more attractive destination for FDI, understanding the investment dangers is increasingly important.
Although political uncertainty appears to take over media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable increase in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming extremely appealing for FDI. Nevertheless, the prevailing research on how multinational corporations perceive area specific dangers is scarce and frequently lacks insights, a fact solicitors and risk consultants like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on dangers connected with FDI in the region have a tendency to overstate and predominantly pay attention to political dangers, such as government instability or policy changes that may impact investments. But lately research has started to shed a light on a a crucial yet often overlooked factor, namely the consequences of cultural factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous companies and their management teams somewhat neglect the effect of cultural differences, mainly due to a lack of comprehension of these cultural variables.
Working on adjusting to regional traditions is necessary however adequate for effective integration. Integration is a loosely defined concept involving a lot of things, such as for example appreciating local values, comprehending decision-making styles beyond a restricted transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, effective business affairs are far more than just transactional interactions. What influences employee motivation and job satisfaction vary greatly across countries. Hence, to genuinely 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 experts and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Secondly, methods that can be effectively implemented on the ground to translate this new mindset into practice.
Recent scientific 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 danger perceptions and management techniques of Western multinational corporations active widely in the area. For instance, a study involving several major worldwide businesses in the GCC countries revealed some interesting data. It argued that the risks related to foreign investments are a great deal more complicated than simply political or exchange price risks. Cultural risks are perceived as more important than political, economic, or economic dangers in accordance with survey data . Additionally, the study discovered that while elements of Arab culture strongly influence the business environment, numerous foreign companies find it difficult to adjust to local customs and routines. This difficulty in adapting constitutes a danger dimension that will require further investigation and a big change in just how multinational corporations operate in the region.