Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

The Middle East, specially the Arabian Gulf, has experienced a notable upsurge in foreign direct investment. Find out about the potential risks that companies might encounter.

Recent studies on risks associated with foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge regarding the risk perceptions and administration methods of Western multinational corporations active widely in the region. As an example, research project involving several major international companies in 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 governmental, monetary, or economic dangers according to survey data . Additionally, the research unearthed that while aspects 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 danger dimension that requires further investigation and a change in exactly how multinational corporations run in the region.

Although governmental uncertainty appears to dominate news coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly attractive for FDI. Nevertheless, the existing research how multinational corporations perceive area specific risks is scarce and often does not have insights, a fact solicitors and danger professionals like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on dangers associated with FDI in the area have a tendency to overstate and predominantly pay attention to governmental risks, such as government uncertainty or policy changes that could influence investments. But recent research has begun to shed a light on a a critical yet often overlooked factor, specifically the consequences of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous companies and their administration teams notably brush aside the impact of cultural differences, due primarily to deficiencies in understanding of these social variables.

Focusing on adjusting to local traditions is necessary not adequate for effective integration. Integration is a loosely defined concept involving a lot of things, such as appreciating regional values, understanding decision-making styles beyond a restricted transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, effective business relationships tend to be more than just transactional interactions. What influences employee motivation and job satisfaction differ greatly across cultures. Hence, to genuinely incorporate your business in the Middle East a couple of things are expected. Firstly, a corporate mind-set shift in risk management beyond economic risk management tools, as consultants and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Secondly, techniques that can be efficiently implemented on the ground to convert the new strategy into action.