Recent research shows the significant part that cultural differences play within the success or of foreign investments in the Arab Gulf.
Working on adjusting to local culture is essential however enough for effective integration. Integration is a loosely defined concept involving many things, such as appreciating local values, understanding decision-making styles beyond a limited transactional business perspective, and looking into societal norms that influence business practices. In GCC countries, successful business interactions tend to be more than just transactional interactions. What affects employee motivation and job satisfaction vary greatly across cultures. Therefore, to genuinely integrate your business in the Middle East a couple of things are essential. Firstly, a corporate mindset shift in risk management beyond economic risk management tools, as experts and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Secondly, strategies that can be effectively implemented on the ground to convert this new mindset into action.
Pioneering studies on risks linked to foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge concerning the danger perceptions and management strategies of Western multinational corporations active extensively in the region. As an example, research project involving a few major international companies in the GCC countries unveiled some fascinating data. It contended that the risks associated with foreign investments are far more complex than simply political or exchange price risks. Cultural risks are perceived as more important than governmental, monetary, or financial risks according to survey data . Additionally, the research discovered that while aspects of Arab culture strongly influence the business environment, many foreign organisations find it difficult to adapt to local traditions and routines. This trouble in adapting constitutes a risk dimension that will require further investigation and a change in how multinational corporations run in the area.
Although political instability generally seems to take over media coverage regarding the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a steady upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly appealing for FDI. Nevertheless, the existing research how multinational corporations perceive area specific risks is scarce and often does not have depth, a fact solicitors and risk consultants like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks connected with FDI in the region have a tendency to overstate and predominantly concentrate on governmental risks, such as for example government instability or policy changes that may affect investments. But lately research has started to shed a light on a a vital yet often overlooked aspect, particularly the effects of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous companies and their management teams notably disregard the effect of cultural differences, due mainly to too little knowledge of these cultural variables.