As the Middle East turns into a more appealing location for FDI, understanding the investment risks is increasingly important.
Pioneering studies on dangers linked to international direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge concerning the risk perceptions and administration techniques of Western multinational corporations active widely in the area. For example, research project involving several major worldwide companies in the GCC countries unveiled some fascinating findings. It argued that the risks connected with foreign investments are far more complicated than just political or exchange rate risks. Cultural risks are regarded as more crucial than governmental, financial, or economic risks in accordance with survey data . Also, the study discovered that while elements of Arab culture strongly influence the business environment, many foreign organisations struggle to adapt to regional customs and routines. This trouble in adapting is really a danger dimension that requires further investigation and a big change in just how multinational corporations run in the area.
Working on adjusting to regional culture is necessary yet not enough for effective integration. Integration is a loosely defined concept involving many things, such as appreciating local values, comprehending decision-making styles beyond a restricted transactional business viewpoint, 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 cultures. Thus, to genuinely integrate your business in the Middle East a couple of things are essential. Firstly, a business mind-set change in risk management beyond monetary risk management tools, as specialists and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest. Secondly, strategies that can be effectively implemented on the ground to translate the new approach into practice.
Although political instability seems to dominate media coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming increasingly appealing for FDI. But, the prevailing research how multinational corporations perceive area specific dangers is scarce and usually does not have depth, an undeniable fact attorneys and risk consultants like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on dangers connected with FDI in the area have a tendency to overstate and predominantly focus on political risks, such as for example government uncertainty or policy modifications which could affect investments. But lately research has begun to shed a light on a a vital yet often overlooked aspect, namely the consequences of social factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams considerably disregard the impact of cultural differences, due primarily to too little knowledge of these cultural variables.