A Story of Big Business Project Failure

Many companies try to share their success stories to impress their investors or clients. But I want to share with you the story of the failure of a large strategic project in a large and strategic country in North Africa to share with you, the lessons learned.

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We have tried to invest in the north African country since August 2018 in one specific project with the same scope and same purpose. And over the following six years, in cooperation with three different work teams, we have tried to reach a fruitful result that would achieve success for our company in its project and achieve the development that the country wants and seeks, especially with its economic conditions that are not at their best.

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But due to the difference in cultures and the nature of the thinking of the people of those countries, the project was not agreed upon nor the results that we aspired to were achieved.

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I do not want to go into the details of that project. But if it had been achieved, it would have been one of the best projects that could be carried out in that country. Especially since our company has no special conditions or political ambitions that would be a reason for violating the sovereignty of the state or its political and economic decision because we are a purely commercial company.

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The money we invest in our projects is not included in the list of suspicious funds and our methods are far from money laundering. Governance, transparency and commitment to ethical standards are the basis of our work.

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Were our principles the reason for the failure of the agreement with the government in that country?

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I think the reason was the psychology of peoples and the difference in cultures that may meet or differ for many reasons. This article is brief and explains part of them. The psychology of nations and cultural norms significantly influence Foreign Direct Investment (FDI) success. Here are key factors:

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Cultural Norms:

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1. Trust and cooperation: Countries with high trust levels (e.g., Nordic nations) attract more FDI.

2. Individualism vs. collectivism: Individualistic cultures (e.g., US) prioritize profit, while collectivist cultures (e.g., Japan) emphasize group harmony.

3. Uncertainty avoidance: Countries with low tolerance for uncertainty (e.g., Germany) may require more reassurance.

4. Time orientation: Long-term oriented cultures (e.g., China) facilitate investments with delayed returns.

5. Communication styles: Direct (e.g., US) vs. indirect (e.g., Japan) communication affects negotiation and partnership success.

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Psychological Factors:

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1. National identity and pride: Countries with strong national identity may resist foreign influence.

2. Risk perception: Nations with high risk tolerance (e.g., Singapore) attract more FDI.

3. Economic nationalism: Protectionist policies deter FDI.

4. Corruption perception: Transparent countries (e.g., Norway) attract more FDI.

5. Education and skills: Countries with skilled workforces (e.g., South Korea) support knowledge-intensive investments.

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Institutional Factors:

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1. Regulatory framework: Clear, stable regulations attract FDI.

2. Governance quality: Effective institutions and rule of law ensure investor protection.

3. Infrastructure: Developed infrastructure facilitates business operations.

4. Tax environment: Competitive tax rates and stable policies encourage investment.

5. Political stability: Stability and predictability reassure investors.

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Success Examples:

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1. Singapore: Business-friendly environment, low corruption, and skilled workforce.

2. Ireland: Low corporate tax rate, pro-business policies, and highly educated workforce.

3. Estonia: Digital infrastructure, ease of doing business, and innovation-friendly environment.

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Failure Examples:

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1. Venezuela: Economic nationalism, corruption, and unstable politics.

2. North Korea: Extreme regulatory restrictions and political instability.

3. Argentina: Economic instability, protectionism, and bureaucratic hurdles.

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To mitigate risks, investors should:

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1. Research local culture and norms.

2. Engage local partners or consultants.

3. Develop adaptive business strategies.

4. Monitor regulatory changes.

5. Foster relationships with local authorities.

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