Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

As the Middle East becomes a more desirable location for FDI, understanding the investment dangers is increasingly important.

Pioneering studies on dangers linked to international direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge concerning the risk perceptions and administration strategies of Western multinational corporations active widely in the area. For instance, research project involving several major worldwide companies in the GCC countries unveiled some interesting data. It suggested that the risks related to foreign investments are a great deal more complex than simply political or exchange rate risks. Cultural risks are perceived as more essential than political, economic, or financial risks based on survey data . Additionally, the study discovered that while elements of Arab culture strongly influence the business environment, many foreign businesses struggle to adapt to regional traditions and routines. This difficulty in adapting constitutes a danger dimension that requires further investigation and a change in just how multinational corporations run in the region.

Working on adjusting to regional traditions is necessary yet not enough for successful 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 limited transactional business viewpoint, and looking at societal norms that influence business practices. In GCC countries, successful business interactions are far more than just transactional interactions. What influences employee motivation and job satisfaction vary greatly across countries. Hence, to seriously integrate your business in the Middle East a couple of things are essential. Firstly, a business mind-set change in risk management beyond financial risk management tools, as experts and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest. Secondly, techniques that may be effortlessly implemented on the ground to convert this new approach into practice.

Although political instability appears to dominate media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a stable upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly appealing for FDI. But, the existing research on how multinational corporations perceive area specific risks is scarce and often lacks depth, a fact lawyers and risk consultants like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on risks associated with FDI in the region have a tendency to overstate and mostly pay attention to governmental dangers, such as for example government uncertainty or policy modifications which could impact investments. But recent research has started to illuminate a critical yet often overlooked aspect, namely the effects of social facets regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of businesses and their administration teams dramatically neglect the effect of cultural differences, due mainly to a lack of understanding of these cultural factors.