Cultural inclusion and foreign investments in GCC states

Cultural inclusion and foreign investments in GCC states

Blog Article

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

Focusing on adjusting to local traditions is necessary although not adequate for successful integration. Integration is a loosely defined concept involving several things, such as for instance appreciating local values, understanding decision-making styles beyond a restricted transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, successful business affairs are far more than just transactional interactions. What shapes employee motivation and job satisfaction differ greatly across cultures. Hence, to seriously incorporate your business in the Middle East a couple of things are essential. Firstly, a corporate mind-set change in risk management beyond monetary risk management tools, as consultants and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest. Next, techniques that can be efficiently implemented on the ground to convert this new strategy into practice.

Pioneering studies on risks connected to international direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge concerning the risk perceptions and administration techniques of Western multinational corporations active extensively in the region. As an example, research project involving a few major worldwide companies in the GCC countries revealed some interesting findings. It suggested that the risks related to foreign investments are a lot more complex than just political or exchange rate risks. Cultural risks are perceived as more important than political, monetary, or financial dangers in accordance with survey data . Also, the research discovered that while aspects of Arab culture strongly influence the business environment, many foreign firms find it difficult to adjust to regional traditions and routines. This difficulty in adapting constitutes a risk dimension that will require further investigation and a big change in exactly how multinational corporations run in the area.

Although governmental instability seems to dominate media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable upsurge in international direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. However, the prevailing research how multinational corporations perceive area specific dangers is scarce and frequently lacks insights, a well known fact attorneys and risk experts like Louise Flanagan in Ras Al Khaimah would probably be aware of. Studies on dangers connected with FDI in the area tend to overstate and predominantly pay attention to governmental risks, such as government uncertainty or policy changes that could impact investments. But lately research has started to illuminate a crucial yet often overlooked aspect, namely the consequences of cultural factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams significantly underestimate the impact of cultural differences, mainly due to too little knowledge of these cultural factors.