Recent research shows the significant part that cultural differences play in the success or of foreign investments in the Arab Gulf.
Recent studies on dangers connected to international direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge regarding the risk perceptions and management techniques of Western multinational corporations active widely in the region. For example, a study involving several major international companies within the GCC countries unveiled some fascinating data. It suggested that the risks associated with foreign investments are a lot more complicated than simply political or exchange price risks. Cultural risks are regarded as more essential than governmental, economic, or economic risks based on survey data . Moreover, the study discovered that while aspects of Arab culture strongly influence the business environment, many foreign companies struggle to adapt to local customs and routines. This difficulty in adapting constitutes a risk dimension that requires further investigation and a big change in how multinational corporations run in the area.
Although governmental instability appears to dominate media coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a steady upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly appealing for FDI. Nonetheless, the present research on how multinational corporations perceive area specific risks is scarce and usually lacks depth, a fact solicitors and risk experts like Louise Flanagan in Ras Al Khaimah may likely be familiar with. Studies on risks related to FDI in the region tend to overstate and predominantly pay attention to governmental risks, such as government uncertainty or policy modifications which could affect investments. But recent research has begun to illuminate a critical yet often overlooked factor, particularly the effects of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams significantly underestimate the effect of cultural differences, due mainly to a lack of comprehension of these cultural variables.
Focusing on adjusting to local traditions is essential although not enough for effective integration. Integration is a loosely defined concept involving a lot of things, such as for example appreciating regional values, understanding decision-making styles beyond a restricted 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 shapes employee motivation and job satisfaction vary greatly across countries. Thus, to seriously integrate your business in the Middle East a few things are expected. Firstly, a corporate mind-set 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 would probably suggest. Next, techniques which can be efficiently implemented on the ground to convert the new mindset into practice.