Recent research shows the significant part that cultural differences play within the success or of foreign investments in the Arab Gulf.
Although governmental 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 stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become increasingly appealing for FDI. Nonetheless, the existing research how multinational corporations perceive area specific dangers is scarce and often does not have depth, a well known fact attorneys and risk professionals like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on risks connected with FDI in the region have a tendency to overstate and predominantly pay attention to political dangers, such as government uncertainty or policy changes which could affect investments. But recent research has begun to illuminate a crucial yet often overlooked aspect, particularly the effects of social factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their management teams notably neglect the effect of cultural differences, mainly due to too little understanding of these cultural factors.
Focusing on adjusting to local traditions is important yet not enough for successful integration. Integration is a loosely defined concept involving several things, such as appreciating local values, learning about decision-making styles beyond a restricted transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, successful business connections are far more than just transactional interactions. What affects employee motivation and job satisfaction vary significantly across cultures. Therefore, to seriously integrate your business in the Middle East a couple of things are essential. Firstly, a corporate mind-set change in risk management beyond economic risk management tools, as consultants and solicitors such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably recommend. Secondly, techniques which can be efficiently implemented on the ground to translate this new approach into action.
Recent scientific studies on risks 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 administration strategies of Western multinational corporations active widely in the region. For example, research project involving a few major international businesses in the GCC countries revealed some fascinating data. It argued that the risks related to foreign investments are even more complicated than just political or exchange price risks. Cultural risks are perceived as more crucial than governmental, financial, or economic risks according to survey data . Furthermore, the study discovered that while elements of Arab culture strongly influence the business environment, numerous foreign organisations find it difficult to adjust to regional traditions and routines. This difficulty in adapting constitutes a risk dimension that will require further investigation and a change in how multinational corporations run in the region.