Risk research reports have mainly focused on governmental risks, frequently overlooking the critical effect of cultural variables on investment sustainability.
Recent studies on risks associated with international direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge regarding the risk perceptions and management methods of Western multinational corporations active extensively in the region. As an example, research project involving a few major worldwide companies within the GCC countries revealed some fascinating findings. It contended that the risks associated with foreign investments are a lot more complicated than simply political or exchange rate risks. Cultural risks are perceived as more crucial than political, economic, or economic risks according to survey data . Furthermore, the study found that while aspects 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 requires further investigation and a big change in how multinational corporations run in the area.
Although governmental instability seems to take over media coverage regarding the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable increase in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more appealing for FDI. However, the existing research on what multinational corporations perceive area specific dangers is scarce and frequently does not have insights, an undeniable fact solicitors and risk professionals like Louise Flanagan in Ras Al Khaimah would probably be aware of. Studies on dangers connected with FDI in the region have a tendency to overstate and predominantly pay attention to political risks, such as for example government uncertainty or policy changes which could affect investments. But recent research has started to shed a light on a a critical yet often overlooked aspect, namely the effects of cultural facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous companies and their management teams considerably disregard the effect of cultural differences, due primarily to a lack of knowledge of these social factors.
Focusing on adjusting to regional traditions is essential not enough for effective integration. Integration is a loosely defined concept involving many things, such as for example appreciating local values, comprehending decision-making styles beyond a restricted transactional business viewpoint, and looking at societal norms that influence business practices. In GCC countries, effective business affairs are far more than just transactional interactions. What shapes employee motivation and job satisfaction vary greatly across countries. Thus, to genuinely integrate your business in the Middle East a couple of things are needed. Firstly, a business mindset shift in risk management beyond monetary risk management tools, as professionals and lawyers such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Next, strategies that may be effortlessly implemented on the ground to translate this new approach into practice.