Call to address family business challenges

More researches and laws are needed for family businesses to thrive in the region. At least 30 percent of well established GCC family businesses have dissolved due to lack of proper governance, according to an expert.

“In the GCC region, we are losing lots of family businesses; they are unstable and shaking up. In the last 10 years, some 30 percent of the well established family businesses, that make real contribution to the economy, has been lost,” Dr Mohamed Buheji, Founder, International Institute of Inspiration Economy, told The Peninsula, on the sidelines of a seminar.

“We need to have more studies on family business so that the authorities will know how to support them and the respective governments can step in to address specific issues at various levels. Family businesses should have clear planning for succession, role of family members inside the company, their responsibility, code of conduct, authority and the capital invested,” he said.

With the countries in the region aiming for a non-hydrocarbon economy, governments need to give special emphasis on family businesses as they play critical role in the economies in this region.

“You cannot shift the economy unless you have a strong family businesses. All the leading countries in the world have more than 90 percent family businesses. Most of the major automobile companies are family owned and they have managed to grow only because of proper governance. In this region, since we do not have these plans, we are losing big companies, Buheji said.

Growth of family businesses in the region are hindered by lack of succession rules. A study conducted in the region showed that only 45 percent of the family businesses go beyond the first generation, while just 30 percent make it beyond the second generation. Only 2 percent of the family businesses in the region go beyond fourth generation, regardless of the size or capital. Only 15 percent of family business last beyond 51 years, studies have shown.

“Another major block for family business in the region is the inability to renew and evolve. In most of the family businesses, the founder is in full control of the company, instead the younger generations should be given responsibility and there is no crisis management. Also families are not proactive in having more of family councils to save business and solve internal problems,” he added.

The seminar on opportunities and challenges of family businesses, was organised by Qatar International Centre for Conciliation and Arbitration (QICCA) in collaboration with Doha Institute for Graduate Studies (DI).