Risk studies have mainly focused on governmental risks, usually overlooking the critical effect of social variables on investment sustainability.

Although governmental instability appears to dominate media coverage regarding the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets have become extremely attractive for FDI. Nevertheless, the existing research how multinational corporations perceive area specific dangers is scarce and often does not have insights, a fact solicitors and risk consultants like Louise Flanagan in Ras Al Khaimah would probably know about. Studies on risks connected with FDI in the area tend to overstate and mostly focus on political dangers, such as for instance government instability or policy changes which could impact investments. But recent research has begun to illuminate a crucial yet often overlooked aspect, particularly the effects of social facets on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of companies and their administration teams notably brush aside the impact of cultural differences, due primarily to deficiencies in understanding of these social variables.

Focusing on adjusting to local culture is essential although not enough for successful integration. Integration is a loosely defined concept involving a lot of things, such as for example appreciating local values, learning about decision-making styles beyond a limited transactional business viewpoint, and looking into societal norms that influence company practices. In GCC countries, successful business connections are far more than just transactional interactions. What impacts employee motivation and job satisfaction vary significantly across countries. Thus, to seriously incorporate your business in the Middle East two things are expected. Firstly, a corporate mind-set change in risk management beyond economic risk management tools, as specialists and lawyers such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Next, methods that can be efficiently implemented on the ground to translate the new mindset into practice.

Recent scientific studies on risks associated with international direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge about the risk perceptions and management methods of Western multinational corporations active widely in the region. As an example, a study involving a few major international companies within the GCC countries revealed some interesting data. It argued that the risks related to foreign investments are far more complicated than simply political or exchange rate risks. Cultural risks are perceived as more crucial than governmental, monetary, or financial risks based on survey data . Additionally, the research discovered that while elements of Arab culture strongly influence the business environment, numerous foreign firms find it difficult to adjust to local customs and routines. This trouble in adapting is really a risk dimension that needs further investigation and a change in how multinational corporations run in the area.