Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

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

Recent studies on risks associated with foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge about the danger perceptions and management techniques of Western multinational corporations active widely in the area. For example, research project involving a few major worldwide companies in the GCC countries revealed some interesting findings. It suggested that the risks connected with foreign investments are a great deal more complicated than simply political or exchange rate risks. Cultural risks are perceived as more crucial than governmental, financial, or financial dangers based on survey data . Also, the study found that while elements of Arab culture strongly influence the business environment, many foreign firms struggle to adapt to local customs and routines. This difficulty in adapting constitutes a danger dimension that needs further investigation and a change in exactly how multinational corporations run in the region.

Although political instability appears to dominate news coverage regarding the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady increase in international direct investment (FDI). The Middle East and Arab Gulf markets have become rapidly attractive for FDI. Nevertheless, the present research how multinational corporations perceive area specific dangers is scarce and usually does not have depth, an undeniable fact solicitors and risk professionals like Louise Flanagan in Ras Al Khaimah may likely be familiar with. Studies on risks associated with FDI in the region have a tendency to overstate and predominantly pay attention to governmental risks, such as for instance government instability or policy changes that may impact investments. But recent research has begun to illuminate a vital yet often overlooked aspect, specifically the consequences of social factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their management teams dramatically neglect the impact of cultural differences, due primarily to deficiencies in understanding of these social variables.

Focusing on adjusting to local culture is important yet not enough for successful integration. Integration is a loosely defined concept involving numerous things, such as for instance appreciating local values, learning about decision-making styles beyond a limited transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, effective business connections are far more than just transactional interactions. What affects employee motivation and job satisfaction differ greatly across countries. Thus, to seriously integrate your business in the Middle East a few things are needed. Firstly, a business mindset shift in risk management beyond financial risk management tools, as professionals and lawyers such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Next, strategies that may be effortlessly implemented on the ground to translate this new approach into practice.