Examining FDI sustainability in the Arabian Gulf these days

Examining FDI sustainability in the Arabian Gulf these days

Blog Article

Risk research reports have mainly focused on political dangers, usually overlooking the critical impact of cultural variables on investment sustainability.

Although political instability appears to take over news coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady boost in international direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly attractive for FDI. Nevertheless, the present research on what multinational corporations perceive area specific dangers is scarce and usually does not have insights, a fact lawyers and risk experts like Louise Flanagan in Ras Al Khaimah may likely be familiar with. Studies on dangers connected with FDI in the area have a tendency to overstate and mostly pay attention to political risks, such as government instability or policy changes that could affect investments. But recent research has started to illuminate a critical yet often overlooked aspect, specifically the effects of cultural factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many companies and their management teams considerably neglect the effect of cultural differences, due mainly to deficiencies in knowledge of these cultural variables.

Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge concerning the danger perceptions and management techniques of Western multinational corporations active extensively in the area. For example, research project involving a few major worldwide companies in the GCC countries revealed some fascinating data. It suggested that the risks related to foreign investments are even more complicated than just political or exchange rate risks. Cultural risks are perceived as more important than governmental, monetary, or financial dangers based on survey data . Moreover, the study found that while elements of Arab culture strongly influence the business environment, numerous foreign companies struggle to adjust to regional traditions and routines. This difficulty in adapting constitutes a danger dimension that will require further investigation and a big change in just how multinational corporations operate in the area.

Focusing on adjusting to regional culture is necessary not enough for successful integration. Integration is a loosely defined concept involving many things, such as for example appreciating regional values, comprehending decision-making styles beyond a limited transactional business viewpoint, and looking into 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 a couple of things are needed. Firstly, a business mindset change in risk management beyond economic risk management tools, as experts and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Next, techniques that can be effortlessly implemented on the ground to translate this new strategy into action.