Cultural inclusion and foreign investments in GCC states

Cultural inclusion and foreign investments in GCC states

Blog Article

Risk research reports have mainly concentrated on governmental dangers, usually overlooking the critical effect of social variables on investment sustainability.

Although political uncertainty seems to dominate news coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady upsurge in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become increasingly attractive for FDI. But, the existing research how multinational corporations perceive area specific dangers is scarce and frequently does not have depth, an undeniable fact solicitors and risk professionals like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers connected with FDI in the region have a tendency to overstate and predominantly focus on governmental dangers, such as government instability or policy modifications that may affect investments. But recent research has begun to shed a light on a a critical yet often overlooked aspect, particularly the consequences of cultural factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many companies and their management teams notably undervalue the impact of cultural differences, due mainly to too little understanding of these cultural factors.

Focusing on adjusting to local culture is essential not sufficient for successful integration. Integration is a loosely defined concept involving several things, such as for example appreciating local values, understanding decision-making styles beyond a restricted transactional business viewpoint, and looking at societal norms that influence company practices. In GCC countries, successful business interactions are more than just transactional interactions. What influences employee motivation and job satisfaction vary greatly across cultures. Therefore, to genuinely incorporate your business in the Middle East two things are essential. Firstly, a business mindset shift in risk management beyond monetary risk management tools, as consultants and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably recommend. Secondly, methods that may be efficiently implemented on the ground to translate this new approach into practice.

Pioneering scientific studies on dangers connected to foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge regarding the risk perceptions and management methods of Western multinational corporations active widely in the region. For example, a study involving a few major international companies in the GCC countries revealed some fascinating data. It argued that the risks associated with foreign investments are even more complicated than just political or exchange rate risks. Cultural risks are perceived as more important than political, economic, or financial dangers according to survey data . Additionally, the study found that while aspects of Arab culture strongly influence the business environment, many foreign businesses find it difficult to adjust to regional traditions and routines. This trouble in adapting is really a risk dimension that will require further investigation and a change in how multinational corporations run in the area.