Evaluating FDI sustainability in the Arabian Gulf these days

Evaluating FDI sustainability in the Arabian Gulf these days

Blog Article

Recent research highlights the significant role that cultural differences play within the success or of foreign investments in the Arab Gulf.

Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge about the risk perceptions and management strategies of Western multinational corporations active extensively in the area. For example, a study involving several major international businesses within the GCC countries unveiled some fascinating data. It contended that the risks connected with foreign investments are much more complex than just political or exchange rate risks. Cultural risks are perceived as more important than political, financial, or economic risks based on survey data . Moreover, the research discovered that while elements of Arab culture strongly influence the business environment, numerous foreign businesses find it difficult 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 appears to dominate media coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady increase in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming increasingly attractive for FDI. Nonetheless, the present research on what multinational corporations perceive area specific risks is scarce and frequently does not have insights, an undeniable fact attorneys and risk experts like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on dangers connected with FDI in the area tend to overstate and mostly concentrate on political dangers, such as government instability or policy modifications that could affect investments. But lately research has begun to illuminate a critical yet often overlooked factor, particularly the consequences of social factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous businesses and their management teams dramatically neglect the impact of cultural differences, due mainly to a lack of knowledge of these social factors.

Focusing on adjusting to regional culture is necessary but not enough for successful integration. Integration is a loosely defined concept involving several things, such as for instance appreciating local values, comprehending decision-making styles beyond a limited transactional business viewpoint, and looking at societal norms that influence company practices. In GCC countries, effective business relationships are far more than just transactional interactions. What influences employee motivation and job satisfaction vary greatly across cultures. Thus, to genuinely incorporate your business in the Middle East two things are expected. Firstly, a corporate mindset change in risk management beyond economic risk management tools, as experts and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Secondly, techniques that can be effortlessly implemented on the ground to translate this new approach into action.