Examining FDI sustainability in the Arabian Gulf nowadays

Examining FDI sustainability in the Arabian Gulf nowadays

Blog Article

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

Although governmental instability appears to take over media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a steady boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly appealing for FDI. However, the present research how multinational corporations perceive area specific dangers is scarce and often lacks depth, a fact lawyers and risk consultants like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on risks connected with FDI in the area tend to overstate and mostly pay attention to governmental dangers, such as for instance government uncertainty or policy modifications that could affect investments. But recent research has begun to illuminate a critical yet often overlooked aspect, namely the effects of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous businesses and their management teams significantly undervalue the impact of cultural differences, due primarily to a lack of understanding of these cultural variables.

Recent scientific studies on dangers linked to foreign direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge about the risk perceptions and administration methods of Western multinational corporations active widely in the region. As an example, a study involving several major international companies in the GCC countries unveiled some interesting findings. It contended that the risks related to foreign investments are a great deal more complex than just political or exchange rate risks. Cultural risks are perceived as more important than political, financial, or economic risks according to survey data . Furthermore, the research found that while aspects of Arab culture strongly influence the business environment, many foreign businesses struggle to adapt to local customs and routines. This difficulty in adapting is really a risk dimension that requires further investigation and a big change in exactly how multinational corporations run in the region.

Working on adjusting to local culture is essential yet not adequate for successful integration. Integration is a loosely defined concept involving many things, such as appreciating local values, understanding decision-making styles beyond a limited transactional business viewpoint, and looking at societal norms that influence business practices. In GCC countries, successful business affairs tend to be more than just transactional interactions. What impacts employee motivation and job satisfaction vary significantly across countries. Thus, to seriously incorporate your business in the Middle East two things are needed. Firstly, a business mind-set change in risk management beyond monetary risk management tools, as professionals and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest. Secondly, strategies that may be effortlessly implemented on the ground to translate this new approach into action.