Family Business in the Arab World

 Is there any lesson that can be learned from family business in the Arab World?

DSC_0964This was the question that motivated my curiosity when I decided to lead the first Family Business in the Arab World academic conference in partnership with Tharawat Family Business Forum and Sharjah Entrepreneurship Center hosted at American University of Sharjah. The two-day conference format was a successful event that gathered more than 150 participants, including academics, practitioners, business families, and students from all around the world. This conference was organized to honor Sheikh Saoud Khalid Al Qassimi’s legacy, a Sharjah businessman who founded a family business back in the 1970s that is now in its third generation.

I opened the academic day with one idea: “I believe that understanding family and business ties by exploring the cultural and historical perspective of the Arab World could bring invaluable inputs to the family business field.” Authors representing universities from the United Arab Emirates (UAE), Lebanon, Saudi Arabia, India, Spain, Oman, Kuwait, Palestine, Tunisia, the United Kingdom, the United States, Sweden, France, Australia, Germany, Morocco, Greece, Egypt, Bahrein, Afghanistan, Italy, and Malaysia shared their research. This exchange of ideas about how the family business phenomenon is understood in different cultures within the Arab World challenged participants’ knowledge and interpretations of family business management. We discussed a variety of topics, including family business entrepreneurship, women entrepreneurship, and family business ownership and management as well as the challenges the next generation of family business members face in the Arab World.

I hope that the rich and colorful debate we had will be reflected in the way we investigate and unpack the role of economic activities in family relationships in the Arab World. It is expected that the outcomes of this conference will be captured in a special issue of the Journal of Family Business Strategy titled Family Business in the Arab World, which will have four guest editors: Rania Labaki, Marcel Bogers, Norris Krueger, and myself (Rodrigo Basco).

DSC_1311The second day had a practical vision and our intention was to debate the challenges of family business in the Arab World with existing business families. We believe that interaction and idea exchange between and among generations is necessary to shape the future of the family and the firm. We are responsible for our family businesses, and this responsibility starts the moment we imagine the future vision of our families and firms.

We had three panels to discuss the future of family business in the Arab World. The first panel focused on the macro perspective to identify the conditions under which family firms operate in the region and the challenges that emerge for family firms. Arab economies are basically, at least to a certain extent, characterized by family business capitalism with differences and similarities that make the model more or less successful. For instance, the development of the UAE was based on family business along with clear leadership from the state. Family businesses are the backbone of economic and social development in this region. Even though family business capitalism has been a successful model, I wonder to what extent this model can be replicated for the future. There is an economic and social risk of being locked in a family business network without being open to future technological revolutions. It is my personal opinion that the UAE should be able to move from a family business ecosystem to an entrepreneurial family business ecosystem, and we must consider how family businesses in the region can catch up to the technological revolution while simultaneously generating new ideas.

The second panel focused on the innovation perspective at the firm level to identify how family businesses in the Arab World can be protagonist in future national and international economies. The abundance of natural resources in some Arab countries, such as those belonging to Gulf Cooperation Council (GCC), were the key advantage to sustain their economic and social development. Is this a successful model for the next 40 years? My answer is no. This model has to be complemented with an open vision of the economy to avoid the traditional Dutch Disease[1]. I believe that this is possible by preparing family business organizations to gradually innovate in products, services, marketing, and management, among other areas. How can we prepare family businesses in the Arab World for open innovation? Family businesses’ embeddedness in the region opens the possibility for them to lead the exchange of ideas by being part of the change. The challenge is to prepare our organizations to adopt open innovation without jeopardizing the principles and values that inspire each organization.

The last panel focused on the entrepreneurial spirit of the new generation of family members. It is in the hands of the new generation of family members in the Arab World to interpret the past, present, and future of their region, understand their position in history, and implement actions that situate their businesses as part of the change. They have to be responsible for leading their family firms and for integrating their firms into the national vision to maintain economic and social development and be part of the bigger community—the global world. The new generation of family business members in the Arab world is responsible for improving communication among family business generations, respecting tradition and preserving values and principles that are part of their culture by being open to new ideas, and leading the change to create a peaceful region with economic and social possibilities for everyone who wants to be part of this ecosystem.

What is the difference between family business in the Arab World and family business beyond?

DSC_1357The closing of the event was impressive. Anna Helen Northam gave life and voice to Hadrian’s thoughts regarding his successor (he was Roman emperor from 117 to 138). Further, in “Memories of Hadrian,” Marguerite Yourcenar argued that the basic human being condition transcends time and culture: “It is not by blood, anyhow, that man’s true continuity is established: Alexander’s direct heir is Caesar, and not the frail infant born of a Persian princess in an Astatic Citadel; Epaminondas, dying without issue, was right to boast that he had Victories for daughters. Most men who figure in history have but mediocre offspring, or worse; they seem to exhaust within themselves the resource of a race. A father’s affection is almost always in conflict with the interests of a ruler.”

We are human beings, and no matter where we are, we have similar needs, expectations, and desires; we are fragile, and we are threatened for by an unpredictable future. In this sense, family businesses across the world are the same. However, family businesses across the world differ in how they try to satisfy their needs, fulfill their expectations, achieve their desires, and fight against their own ghosts. Differences come from dissimilar cultural patterns, geographical conditions, and historical patterns, all of which make us different and make us react in different ways.

[1] Financial Times: “Dutch disease is the negative impact on an economy of anything that gives rise to a sharp inflow of foreign currency, such as the discovery of large oil reserves. The currency inflows lead to currency appreciation, making the country’s other products less price competitive on the export market”.
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