Recent research highlights the significant part that cultural differences play in the success or of foreign investments in the Arab Gulf.
Focusing on adjusting to regional culture is essential however enough for successful integration. Integration is a loosely defined concept involving a lot of things, such as for instance appreciating regional values, understanding decision-making styles beyond a limited transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, effective business relationships are more than just transactional interactions. What impacts employee motivation and job satisfaction differ significantly across countries. Thus, to truly integrate your business in the Middle East a couple of things are essential. Firstly, a business mindset shift in risk management beyond financial risk management tools, as experts and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably recommend. Next, strategies that can be effectively implemented on the ground to translate the new approach into practice.
Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge regarding the risk perceptions and management strategies of Western multinational corporations active extensively in the region. As an example, research project involving a few major worldwide businesses within the GCC countries unveiled some interesting findings. It argued that the risks associated with foreign investments are more complex than just political or exchange rate risks. Cultural risks are regarded as more essential than governmental, monetary, or financial risks based on survey data . Moreover, the study found that while elements of Arab culture strongly influence the business environment, numerous foreign businesses find it difficult to adapt to local traditions and routines. This trouble in adapting is really a risk dimension that requires further investigation and a change in exactly how multinational corporations run in the area.
Although political instability generally seems to take over news coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly appealing for FDI. Nonetheless, the present research on how multinational corporations perceive area specific dangers is scarce and frequently lacks depth, a well known fact attorneys and risk consultants like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks related to FDI in the area tend to overstate and predominantly pay attention to governmental risks, such as government uncertainty or policy changes that could influence investments. But lately research has started to shed a light on a a vital yet often overlooked aspect, particularly the consequences of cultural factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many companies and their administration teams dramatically disregard the impact of cultural differences, due primarily to deficiencies in understanding of these social variables.