Risk research reports have primarily concentrated on political risks, usually overlooking the critical impact of social factors on investment sustainability.
Although governmental uncertainty seems to dominate news coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable upsurge in foreign 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 often lacks insights, a fact lawyers and risk professionals like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers connected with FDI in the region tend to overstate and predominantly pay attention to governmental dangers, such as government instability or policy modifications that may affect investments. But recent research has begun to shed a light on a a crucial yet often overlooked aspect, particularly the effects of social facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that numerous businesses and their administration teams dramatically overlook the effect of cultural differences, due mainly to a lack of understanding of these cultural variables.
Pioneering scientific studies on dangers connected 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 widely in the region. As an example, research project involving a few major worldwide businesses in the GCC countries revealed some interesting findings. It argued that the risks related to foreign investments are a lot more complicated than simply political or exchange price risks. Cultural risks are regarded as more essential than governmental, economic, or financial dangers based on survey data . Also, the research found that while aspects of Arab culture strongly influence the business environment, numerous foreign organisations find it difficult to adapt to local traditions and routines. This trouble in adapting constitutes a risk dimension that requires further investigation and a big change in just how multinational corporations run in the region.
Working on adjusting to regional traditions is essential yet not adequate for successful integration. Integration is a loosely defined concept involving many things, such as appreciating local values, learning about decision-making styles beyond a restricted transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, effective business affairs are far more than just transactional interactions. What impacts employee motivation and job satisfaction vary significantly across countries. Therefore, to truly incorporate your business in the Middle East a couple of things are essential. Firstly, a corporate mind-set shift in risk management beyond financial risk management tools, as specialists and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, strategies that can be effortlessly implemented on the ground to translate this new strategy into practice.