Evaluating FDI sustainability in the Arabian Gulf these days

Evaluating FDI sustainability in the Arabian Gulf these days

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Risk research reports have mainly focused on political dangers, usually overlooking the critical effect of cultural factors on investment sustainability.

Working on adjusting to regional culture is important yet not sufficient 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, successful business connections are more than just transactional interactions. What shapes employee motivation and job satisfaction vary significantly across cultures. Hence, to genuinely integrate your business in the Middle East a couple of things are needed. Firstly, a business mindset change in risk management beyond financial risk management tools, as professionals and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Next, techniques that may be effectively implemented on the ground to convert the new strategy into practice.

Although political uncertainty seems to take over media coverage on the Middle East, in recent years, the region—and particularly the Arabian Gulf—has seen a stable increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become more and more appealing for FDI. However, the present research how multinational corporations perceive area specific risks is scarce and usually lacks depth, a well known fact lawyers and risk specialists like Louise Flanagan in Ras Al Khaimah would likely be familiar with. Studies on dangers related to FDI in the area tend to overstate and predominantly pay attention to governmental risks, such as for instance government uncertainty or policy changes which could influence investments. But recent research has started to shed a light on a a crucial yet often overlooked aspect, specifically the consequences of social factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous companies and their management teams notably underestimate the impact of cultural differences, due mainly to too little understanding of these cultural variables.

Pioneering scientific studies on dangers linked to foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge concerning the danger perceptions and management techniques of Western multinational corporations active widely in the region. As an example, research project involving several major international companies within the GCC countries unveiled some fascinating data. It suggested that the risks associated with foreign investments are a lot more complicated than simply political or exchange price risks. Cultural risks are regarded as more important than political, financial, or economic risks based on survey data . Also, the research unearthed that while elements of Arab culture strongly influence the business environment, numerous foreign organisations struggle to adapt to local customs and routines. This difficulty in adapting constitutes a risk dimension that requires further investigation and a change in how multinational corporations operate in the region.