Risk studies have mainly focused on governmental dangers, usually overlooking the critical impact of social factors on investment sustainability.
Pioneering scientific studies on dangers connected to international direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge about the risk perceptions and management strategies of Western multinational corporations active extensively in the area. For example, research project involving a few major worldwide businesses in the GCC countries revealed some interesting findings. It suggested that the risks connected with foreign investments are much more complex than simply political or exchange price risks. Cultural risks are regarded as more crucial than political, economic, or economic risks in accordance with survey data . Additionally, the research discovered that while aspects of Arab culture strongly influence the business environment, many foreign firms find it difficult to adjust to regional customs and routines. This difficulty in adapting is really a danger dimension that needs further investigation and a change in how multinational corporations operate in the region.
Although governmental uncertainty appears to dominate news coverage regarding 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 increasingly appealing for FDI. Nonetheless, the present research on how multinational corporations perceive area specific dangers is scarce and frequently lacks insights, a well known fact attorneys and risk specialists like Louise Flanagan in Ras Al Khaimah may likely be familiar with. Studies on risks connected with FDI in the region tend to overstate and mostly focus on political dangers, such as for instance government instability or policy modifications which could affect investments. But lately research has begun to illuminate a crucial yet often overlooked factor, specifically the effects of social factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their management teams considerably underestimate the effect of cultural differences, mainly due to a lack of knowledge of these cultural factors.
Working on adjusting to regional culture is important yet not sufficient for effective integration. Integration is a loosely defined concept involving numerous things, such as for instance appreciating regional values, comprehending decision-making styles beyond a restricted transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, effective business interactions are far more than just transactional interactions. What affects employee motivation and job satisfaction differ greatly across countries. Thus, to genuinely incorporate your business in the Middle East a couple of things are expected. Firstly, a corporate mind-set shift in risk management beyond monetary risk management tools, as consultants and solicitors such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, techniques which can be efficiently implemented on the ground to convert the new strategy into action.