Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

As the Middle East turns into a more appealing location for FDI, understanding the investment risks is increasingly important.

Working on adjusting to local traditions is important however adequate for successful integration. Integration is a loosely defined concept involving a lot of things, such as appreciating regional values, learning about decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, successful business interactions are more than just transactional interactions. What shapes employee motivation and job satisfaction differ greatly across cultures. Hence, to genuinely integrate your business in the Middle East a few things are expected. Firstly, a corporate mindset change in risk management beyond economic risk management tools, as experts and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, strategies which can be efficiently implemented on the ground to translate this new strategy into practice.

Although governmental instability seems to take over media coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a stable increase in international direct investment (FDI). The Middle East and Arab Gulf markets have become increasingly appealing for FDI. Nevertheless, the existing research on what multinational corporations perceive area specific risks is scarce and usually lacks insights, an undeniable fact lawyers and danger consultants like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers related to FDI in the area tend to overstate and mostly focus on governmental risks, such as government instability or policy modifications 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 lots of businesses and their management teams somewhat disregard the effect of cultural differences, mainly due to too little understanding of these social factors.

Recent scientific studies on dangers associated with international direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge concerning the risk perceptions and administration methods of Western multinational corporations active extensively in the region. As an example, a study involving a few major worldwide companies within the GCC countries unveiled some interesting findings. It suggested that the risks associated with foreign investments are a lot more complicated than just political or exchange rate risks. Cultural risks are regarded as more important than political, economic, or financial risks based on survey data . Also, the research found that while aspects of Arab culture strongly influence the business environment, numerous foreign organisations struggle to adapt to regional traditions and routines. This difficulty in adapting constitutes a risk dimension that will require further investigation and a big change in how multinational corporations operate in the area.