Cultural inclusion and foreign investments in GCC states

Cultural inclusion and foreign investments in GCC states

Blog Article

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

Working on adjusting to local traditions is important but not adequate for effective integration. Integration is a loosely defined concept involving numerous things, such as for example appreciating local values, comprehending decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence company practices. In GCC countries, successful business connections are far more than just transactional interactions. What shapes employee motivation and job satisfaction differ greatly across cultures. Thus, to seriously incorporate your business in the Middle East two things are needed. Firstly, a corporate mindset shift in risk management beyond monetary risk management tools, as consultants and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, strategies that can be effectively implemented on the ground to translate the new strategy into action.

Pioneering studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge regarding the danger perceptions and administration methods of Western multinational corporations active widely in the region. As an example, a study involving several major worldwide businesses within the GCC countries unveiled some fascinating data. It contended that the risks related to foreign investments are even more complicated than simply political or exchange price risks. Cultural risks are perceived as more important than political, financial, or financial dangers in accordance with survey data . Additionally, the study unearthed 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 exactly how multinational corporations run in the area.

Although political instability generally seems to take over media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady increase in international direct investment (FDI). The Middle East and Arab Gulf markets have become more and more attractive for FDI. But, the present research on what multinational corporations perceive area specific risks is scarce and usually lacks depth, a well known fact attorneys and risk specialists like Louise Flanagan in Ras Al Khaimah may likely be aware of. Studies on dangers related to FDI in the region have a tendency to overstate and predominantly concentrate on governmental risks, such as government uncertainty or policy changes that may impact investments. But recent research has begun to illuminate a crucial yet often overlooked aspect, namely the consequences of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of companies and their administration teams dramatically disregard the effect of cultural differences, due mainly to a lack of knowledge of these cultural factors.