Learning about the risks of FDI in the Middle East and beyond

Learning about the risks of FDI in the Middle East and beyond

Blog Article

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

Working on adjusting to local culture is important but not sufficient for successful integration. Integration is a loosely defined concept involving several things, such as for example appreciating local values, understanding decision-making styles beyond a limited transactional business viewpoint, and looking at societal norms that influence company practices. In GCC countries, effective business relationships tend to be more than just transactional interactions. What impacts employee motivation and job satisfaction differ significantly across countries. Thus, to truly integrate your business in the Middle East a couple of things are expected. Firstly, a corporate mindset shift in risk management beyond economic risk management tools, as professionals and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest. Secondly, techniques that may be effortlessly implemented on the ground to convert this new mindset 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 risk perceptions and management techniques of Western multinational corporations active extensively in the area. For instance, research project involving a few 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 regarded as more crucial than political, financial, or economic risks according to survey data . Furthermore, the research unearthed that while elements of Arab culture strongly influence the business environment, numerous foreign businesses struggle to adapt to local traditions and routines. This trouble in adapting is really a risk dimension that requires further investigation and a change in how multinational corporations run in the area.

Although political instability seems to take over news coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. But, the prevailing research on what multinational corporations perceive area specific risks is scarce and often does not have insights, an undeniable fact lawyers and danger specialists like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on risks connected with FDI in the area tend to overstate and predominantly pay attention to governmental risks, such as for example government uncertainty or policy changes that could influence investments. But recent research has started to shed a light on a a crucial yet often overlooked aspect, namely the consequences of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their administration teams dramatically disregard the impact of cultural differences, due primarily to deficiencies in understanding of these social variables.