Recent research highlights the significant part that cultural differences play in the success or of foreign investments in the Arab Gulf.
Pioneering scientific studies on risks associated with international direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge about the danger perceptions and management techniques of Western multinational corporations active widely in the region. For example, a study involving a few major worldwide businesses within the GCC countries unveiled some fascinating findings. It contended 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 financial dangers according to survey data . Moreover, the research unearthed that while elements of Arab culture strongly influence the business environment, many foreign firms find it difficult to adjust to regional customs and routines. This difficulty in adapting constitutes a danger dimension that will require further investigation and a big change in how multinational corporations run in the region.
Working on adjusting to local culture is essential however enough for successful integration. Integration is a loosely defined concept involving many things, such as for instance appreciating regional values, learning about decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence business practices. In GCC countries, successful business connections tend to be more than just transactional interactions. What impacts employee motivation and job satisfaction differ significantly across countries. Thus, to genuinely incorporate your business in the Middle East a few things are expected. Firstly, a business mind-set change in risk management beyond financial risk management tools, as experts and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Next, techniques which can be effectively implemented on the ground to translate the new strategy into practice.
Although political uncertainty generally seems to take over media coverage regarding the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly attractive for FDI. Nevertheless, the present research on how multinational corporations perceive area specific risks is scarce and often lacks insights, a well known fact solicitors and danger specialists like Louise Flanagan in Ras Al Khaimah would probably know about. Studies on dangers related to FDI in the region tend to overstate and predominantly concentrate on governmental dangers, such as for instance government instability or policy changes that could affect investments. But lately research has begun to shed a light on a a vital yet often overlooked aspect, namely the effects of social facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many companies and their administration teams somewhat overlook the effect of cultural differences, due mainly to a lack of understanding of these social factors.