According to present research, a significant challenge for companies in the GCC is adjusting to regional customs and business practices. Learn more about this here.
This social dimension of risk management calls for a change in how MNCs run. Adjusting to regional customs is not only about understanding company etiquette; it also involves much deeper social integration, such as understanding local values, decision-making designs, and the societal norms that impact company practices and employee conduct. In GCC countries, successful business relationships are designed on trust and personal connections instead of just being transactional. Moreover, MNEs can benefit from adjusting their human resource management to reflect the social profiles of local workers, as factors affecting employee motivation and job satisfaction vary widely across countries. This requires a change in mindset and strategy from developing robust economic risk management tools to investing in social intelligence and local expertise as professionals and lawyers such Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest.
A lot of the existing academic work on risk management strategies for multinational corporations highlights particular uncertainties but omits uncertainties that are hard to quantify. Certainly, a lot of research within the worldwide management field has been dedicated to the management of either political risk or foreign currency exchange uncertainties. Finance and insurance coverage literature emphasises the risk variables which is why hedging or insurance instruments could be developed to mitigate or move a firm's danger visibility. However, current research reports have brought some fresh and interesting insights. They have sought to fill part of the research gaps by giving empirical information about the risk perception of Western multinational corporations and their management techniques on the company level in the Middle East. In one investigation after gathering and analysing information from 49 major international companies which are have extensive operations in the GCC countries, the authors found the following. Firstly, the risk related to foreign investments is clearly much more multifaceted compared to often cited factors of political risk and exchange rate exposure. Cultural risk is regarded as more essential than political risk, financial risk, and economic danger. Secondly, despite the fact that elements of Arab culture are reported to really have a strong influence on the business environment, most firms struggle to adapt to local routines and traditions.
In spite of the political uncertainty and unfavourable economic conditions in some areas of the Middle East, international direct investment (FDI) in the area and, specially, into the Arabian Gulf has been steadily increasing in the last two decades. The relevance of the Middle East and Gulf areas is growing for FDI, and the linked risk is apparently essential. Yet, research regarding the risk perception of multinationals in the region is limited in quantity and quality, as experts and attorneys like Louise Flanagan in Ras Al Khaimah may likely attest. Although different empirical research reports have examined the effect of risk on FDI, most analyses have been on political risk. Nevertheless, a new focus has surfaced in current research, shining a spotlight on an often-neglected aspect specifically cultural variables. In these groundbreaking studies, the writers remarked that businesses and their administration usually really overlook the impact of cultural facets as a result of not enough knowledge regarding social factors. In reality, some empirical research reports have discovered that cultural differences lower the performance of multinational enterprises.