{"id":26328,"date":"2023-07-14T17:54:43","date_gmt":"2023-07-14T14:54:43","guid":{"rendered":"https:\/\/www.bicakhukuk.com\/?p=26328"},"modified":"2024-01-13T16:32:56","modified_gmt":"2024-01-13T13:32:56","slug":"overcoming-challenges-of-doing-business-in-turkey","status":"publish","type":"post","link":"https:\/\/www.bicakhukuk.com\/en\/overcoming-challenges-of-doing-business-in-turkey\/","title":{"rendered":"Overcoming Challenges of Doing Business in Turkey"},"content":{"rendered":"

As a developing country with great development potential within the context of doing business, Turkey has attracted enormous volumes of foreign direct investments (FDI) . There are many opportunities that foreign companies can take advantage of, including the large and fast-growing domestic market, an improving institutional environment, various investor-friendly policies in regional and centrally controlled special economic and high-tech development zones, an ever improving quality of human resources, and better infrastructure.\u00a0<\/span><\/p>\n

Despite these opportunities, foreign companies increasingly face a variety of challenges especially during the \u201csoft-landing\u201d of Turkish economy. Perhaps due to the clear signals in 2018 of the anti-globalization tendency, the IMF forecasts decreases in some of the main economic factors in years ahead, not only in Turkey but also in many other major economic entities. The increasingly unfavorable international environment will have significant influences on foreign companies in Turkey, such as causing fiercer competition from local companies who shift back to the domestic market. Another notable disadvantage that foreign companies cannot ignore is the liability of being outsiders.\u00a0<\/span><\/p>\n

Doing business in a foreign country is not an easy task, and the dynamic Turkish market contributes to an even more challenging environment. Despite its impressive economic development, Turkey is still a transitional economy, as it is arguably still moving from a position were few market supporting institutions existed. Thus, it may still be problematic to apply management approaches from advanced countries in Turkey.<\/span><\/p>\n

Regulatory challenges<\/span><\/h3>\n

Foreign businesses in Turkey face government, legal, and regulatory challenges on two main fronts. First, Turkey is an emerging market, characterized by a comparatively weak and fast evolving judicial and regulatory institutional environment. There is great flux in regulatory change across a broad range of spheres, including: environmental regulation and pollution prevention; capital\/financial sector regulation; housing and real estate regulation; labor markets; and digital media content, to name but a few areas. Related government procedures, moreover, are generally less transparent. This can mean that relatively standard everyday tasks, like obtaining permit and product approvals, for example, may potentially become a drain on management resources.<\/span><\/p>\n

Second, and arguably of far greater importance owing to their asymmetric impacts, local and central level governmental actors can potentially exploit local institutional fragility and regulatory flux to preferentially favor and support domestic firms.<\/span><\/p>\n

The Turkish business environment is constantly evolving, with new legislation and regulations being introduced regularly. Foreign companies must stay updated on changes and adapt their strategies accordingly. Engaging in thorough research, attending industry-specific seminars, and working closely with local advisors can ensure that businesses remain compliant and are well-prepared to tackle any bureaucratic challenges that may arise.<\/span><\/p>\n

Innovation management challenges<\/span><\/h3>\n

Innovation management in Turkey is an important topic for both foreign firms and domestic stakeholders. It has been manifested largely through collaborative partnerships between foreign firms and domestic ones in the form of joint ventures in the last four decades. In the form of international partnerships, learning from collaboration partners can contribute to capacity building and industry upgrading. Despite many joint ventures facilitating knowledge, learning, and gaining experience in the development of innovation capabilities, foreign partners largely prefer not to share the core of innovation with Turkish domestic partners. This is in part due to the lack of intellectual property rights protection. Furthermore, when regulatory frameworks allowed, joint ventures tend to be converted into foreign wholly-owned subsidiary in Turkey. In this way, foreign firms may develop and protect innovation within organizational boundaries. In addition, Turkey\u2019s economic development demands the transformation from \u201cMade in Turkey\u201d to \u201cCreated in Turkey\u201d, in order to move up the global value chain in global competition. Importantly, Turkey\u2019s innovation challenge is to overcome the middle-income trap to become an innovation economy.<\/span><\/p>\n

Human resource management challenges<\/span><\/h3>\n

Along with the development of the Turkish economy, HRM has become an increasingly important topic in Turkey. Foreign capital brought modern HRM into Turkish market, leveraging from foreign-owned enterprises (FOEs) to joint ventures (JVs) and further to large domestic companies. Foreign companies introduced formalized high-performance HR practices, which have been attractive to Turkish employees. The transitional Turkish employment system has gradually changed from capital-oriented to talent-oriented after several decades of industrialisation.<\/span><\/p>\n

Complex Bureaucracy<\/span><\/h3>\n

Doing business in a foreign country can be a daunting task, particularly when faced with a complex bureaucracy. Turkey, with its rich history and vibrant economy, offers great potential for foreign companies looking to expand their operations. However, there are several official rules, regulations, and processes that can pose challenges for these companies. The difficulties faced by foreign companies in adapting to the Turkish way of doing business need to be explored and strategies foreign companies can employ to navigate the complexities of the bureaucratic landscape should be discussed.<\/span><\/p>\n