Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

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

Although governmental uncertainty seems to dominate media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a stable increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming extremely appealing for FDI. But, the existing research on how multinational corporations perceive area specific risks is scarce and frequently does not have insights, a well known fact solicitors and danger consultants like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on risks related to FDI in the region tend to overstate and predominantly focus on governmental risks, such as for instance government uncertainty or policy modifications that may influence investments. But lately research has begun to shed a light on a a crucial yet often overlooked factor, specifically the consequences of social factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that lots of companies and their management teams dramatically overlook the effect of cultural differences, due primarily to too little comprehension of these social variables.

Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge concerning the danger perceptions and administration techniques of Western multinational corporations active extensively in the area. For example, research project involving a few major worldwide businesses within the GCC countries revealed some interesting data. It suggested that the risks connected with foreign investments are a great deal more complicated than simply political or exchange price risks. Cultural risks are perceived as more crucial than political, financial, or financial dangers based on survey data . Moreover, the study unearthed that while elements of Arab culture strongly influence the business environment, many foreign firms find it difficult to adjust to local customs and routines. This trouble in adapting is really a risk dimension that requires further investigation and a big change in exactly how multinational corporations operate in the region.

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 interactions 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 shift in risk management beyond monetary risk management tools, as experts and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, methods that may be effortlessly implemented on the ground to convert the new strategy into practice.