Talking about the risk perception of MNCs in the Middle East

Talking about the risk perception of MNCs in the Middle East

Blog Article

Find out more about how precisely Western multinational corporations perceive and manage dangers in the Middle East.

This social dimension of risk management calls for a change in how MNCs run. Conforming to local traditions is not just about being familiar with business etiquette; it also requires much deeper social integration, such as for instance understanding local values, decision-making designs, and the societal norms that influence company practices and worker behaviour. In GCC countries, successful company relationships are built on trust and individual connections rather than just being transactional. Additionally, MNEs can take advantage of adjusting their human resource management to mirror the cultural profiles of regional employees, as variables influencing employee motivation and job satisfaction differ widely across countries. This involves a change in mindset and strategy from developing robust monetary risk management tools to investing in cultural intelligence and regional expertise as consultants and attorneys such Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely suggest.

A lot of the present academic work on risk management strategies for multinational corporations features particular uncertainties but omits uncertainties that are tough to quantify. Indeed, lots of research within the international administration field has focused on the management of either political risk or foreign currency exchange uncertainties. Finance and insurance literature emphasises the risk variables for which hedging or insurance instruments are developed to mitigate or transfer a firm's danger visibility. Nevertheless, present studies have brought some fresh and interesting insights. They have sought to fill the main research gaps by giving empirical knowledge about the risk perception of Western multinational corporations and their management methods at the firm level within the Middle East. In one research after collecting and analysing data from 49 major worldwide businesses that are active in the GCC countries, the authors discovered the following. Firstly, the risk connected with foreign investments is obviously a lot more multifaceted compared to the frequently examined variables of political risk and exchange rate visibility. Cultural danger is perceived as more important than political risk, economic danger, and financial risk. Secondly, even though aspects of Arab culture are reported to have a strong influence on the business environment, most firms find it difficult to adapt to regional routines and traditions.

In spite of the political uncertainty and unfavourable economic climates in some parts of the Middle East, foreign direct investment (FDI) in the region and, especially, within the Arabian Gulf has been progressively increasing within the last 20 years. 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 area is lacking in volume and quality, as specialists and solicitors like Louise Flanagan in Ras Al Khaimah would probably attest. Although different empirical research reports have examined the effect of risk on FDI, many analyses have largely been on political risk. However, a brand new focus has appeared in current research, shining a spotlight on an often-ignored aspect specifically cultural variables. In these pioneering studies, the authors pointed out that companies and their administration frequently really underestimate the impact of social facets as a result of not enough knowledge regarding cultural variables. In reality, some empirical research reports have unearthed that cultural differences lower the performance of international enterprises.