than 1% in Tourism, hospitality, Financial services & Insurance, Medical and Technology sectors
•25% other sectors which includes:
-Advertising
-Consulting
-Farming
-Legal
-Media/PR
-Logistics
-Transportation
-Trading
It was found that most of the companies surveyed have only existed for one or two generations. In fact only 28% of them made to the second generation and percentage declined rapidly thereafter. This is in line with findings of surveys conducted in emerging markets where over a third of family firms have transitioned to the second generation and the majority remained in either the first or second generation.
The Key findings of the study include:
•Family businesses feel satisfied with their current strategic planning process and their capability to achieve long their strategic objectives.
•The Governance structure and its effectiveness and processes was a relative weakness
•There is a serious gap in the succession planning
•The majority of FOBs surveyed do not feel that “going public” is important for their future survival.
In their conclusions and recommendations EY listed the following:
•FOBs need to establish a clearly defined strategy direction. Such plan to be reviewed and updated annually;
•FOBs need to embrace continuous change in technology and management practices;
•FOBs to have an effective family governance structure (Family Council, BOD);
•They need to have a well-defined management and ownership structure;
•They need a well-defined succession plan;
•They need to build capable and talented management teams to include both family and non-family members;
•They need to focus on becoming performance driven.
g.PWC jointly with Pearl Initiative published a study “Family Matters- Governance Practices in GCC Family Firms”. 100 family firms in the GCC were interviewed for the research. Highlights of the report are as follows:
Purpose:
1.Raise awareness and understanding on governance issues, trends and existing practices amongst GCC family firms
2.Enable family firms to benchmark their own business against others in the region and gain insight on how similar businesses address these issues
Findings:
•Majority firms interviewed believe that corporate governance is becoming a key issue for future
•Many see it as one of the most important ways to secure the long term health of the business and improve transparency, efficiency and access to capital and talent
•However, CG is a lower strategic priority at present in comparison to wider operational and commercial concerns and overall profitability
•The top governance issues to GCC family firms are succession and management of conflict
•Other issues include, transparency and accountability, management structure and improving rules and processes and better Boards
•The need to address the family governance and the need for a more rigorous approach to help separate family concerns from business concerns
On another front, a large number of commercial, service and not-for-profit companies are managed by owners or members of families. Hence, the interrelationships between family and non-family businesses are complex and influential in terms of control and interest. Despite the importance of the FOBs in the economy of every country, we still see an absence of them in the legal requirements for corporate governance in the same way other types of companies are included.
Taking into account the fact that the stakeholders to which the FOBs direct their goods and services are the same as those targeted by other forms of businesses and companies, we fail to see the logic in excluding them from the requirement of corporate governance laws. Application of the corporate governance requirements to FOBs will assist in a significant way, taking into account their importance to the economy and in strengthening and promoting the good practices of any corporate governance regime.
h.Advantage Consulting in its report, referred to above, compares the characteristics of FOBs regionally and internationally as shown in the following table:
| Regional | International |
| Businesses are decades old and often still in the hands of the first generation | Family owns more than 50% |
| Vast number of investment opportunities are available, so the family diversifies | More than one generation is involved in the running of the business |
| Availability of capital and opportunities encourages investment outside of core competency | Business tends to have a core focus |
| The family generally involves itself in the day-to-day running of the businesses it owns or is invested in | Family involved in day-to-day operations |
| Some select most suitable manager to run their businesses | |
| Lack of transparency | Striving for transparency due to regulatory requirements |
| In many cases, family acts more as an asset manager than as an operator |
i.ATKEARNE, in their paper, “Family Business in the GCC: Putting Your House in Order (2010), gives the following characteristics for the success of family businesses in GCC:
-Strong entrepreneurial spirit and exceptional leadership.
-Solid political and business relationships.
-Intimate knowledge of regional and international high growth markets.
-Limited Competition from international companies.
-Access to abundant liquidity and a low cost workforce.
-Unique Corporate Culture.
j.A study by Dianna H B Welsh and Peter Raven, “Family Business in the Middle East: An Exploratory study of Retail Management in Kuwait and Lebanon, interestingly looked into following areas to link them to the type of family businesses in the Middle East. These areas include: The influence of Religion, the
