Cultural inclusion and foreign investments in GCC states

Cultural inclusion and foreign investments in GCC states

Blog Article

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

Although political uncertainty appears to dominate news coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable increase in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming rapidly attractive for FDI. However, the present research on how multinational corporations perceive area specific dangers is scarce and often does not have depth, a well known fact attorneys and danger experts like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers related to FDI in the area tend to overstate and mostly concentrate on governmental risks, such as for instance government instability or policy changes that may impact investments. But lately research has started to shed a light on a a vital yet often overlooked aspect, particularly the effects of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that lots of businesses and their administration teams significantly brush aside the impact of cultural differences, due primarily to a lack of knowledge of these social variables.

Focusing on adjusting to regional traditions is necessary however sufficient for effective integration. Integration is a loosely defined concept involving numerous things, such as appreciating regional values, learning about 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 more than just transactional interactions. What affects employee motivation and job satisfaction differ significantly across cultures. Therefore, to seriously integrate your business in the Middle East a few things are needed. Firstly, a corporate mindset change 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 may likely recommend. Next, techniques that may be effortlessly implemented on the ground to convert the new approach into practice.

Pioneering scientific studies on dangers linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge about the danger perceptions and administration methods of Western multinational corporations active widely in the region. For example, a study involving several major international companies in the GCC countries revealed some interesting findings. It contended that the risks related to foreign investments are a great deal more complicated than just political or exchange rate risks. Cultural risks are perceived as more important than political, financial, or economic risks according to survey data . Furthermore, the study found that while aspects of Arab culture strongly influence the business environment, many foreign firms struggle to adapt to local customs and routines. This trouble in adapting is really a danger dimension that will require further investigation and a big change in exactly how multinational corporations run in the area.