Risk studies have mainly concentrated on political risks, frequently overlooking the critical impact of cultural factors on investment sustainability.
Pioneering studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge about the risk perceptions and administration strategies of Western multinational corporations active extensively in the area. For instance, research project involving a few major worldwide businesses within the GCC countries revealed some interesting findings. It contended that the risks related to foreign investments are even more complicated than simply political or exchange price risks. Cultural risks are regarded as more essential than governmental, financial, or economic risks according to survey data . Moreover, the study discovered that while aspects of Arab culture strongly influence the business environment, many foreign companies struggle to adapt to local customs and routines. This difficulty in adapting constitutes a risk dimension that requires further investigation and a change in how multinational corporations run in the area.
Although governmental uncertainty generally seems to take over news coverage regarding the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. However, the existing research how multinational corporations perceive area specific dangers is scarce and usually does not have depth, a fact lawyers and danger specialists like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks associated with FDI in the region have a tendency to overstate and mostly focus on political dangers, such as for example government uncertainty or policy changes that could influence investments. But lately research has started to illuminate a critical yet often overlooked factor, specifically the effects of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams considerably undervalue the effect of cultural differences, due primarily to deficiencies in understanding of these social variables.
Working on adjusting to regional culture is necessary not adequate for successful integration. Integration is a loosely defined concept involving numerous things, such as for instance appreciating local values, learning about decision-making styles beyond a restricted transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, effective business connections are more than just transactional interactions. What shapes employee motivation and job satisfaction differ greatly across countries. Therefore, to truly incorporate your business in the Middle East two things are expected. Firstly, a corporate mind-set shift in risk management beyond financial risk management tools, as professionals and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, methods that may be effortlessly implemented on the ground to translate this new strategy into action.