UAE family firms see future opportunities better than their US counterparts: study

CEOs and members in family businesses in the UAE have a higher perception of business opportunities in their sector of operations than their counterparts in the United States, according to a survey. Entitled Differing perceptions and challenges facing UAE family businesses: Implications for practice, The study released by the Dubai International Financial Centre (DIFC) research unit, was done with the support of the Walker Centre for Global Entrepreneurship at Thunderbird School of Global Management. It is the first study of its kind to compare the views and perceptions of parent-CEOs and family members within UAE-based family businesses. The study also derives its importance from being the first to compare UAE-based family businesses with US-based family businesses using a standardised and tested research tool and through direct face-to-face interviews. The study results indicate a higher level of satisfaction with planning practices among UAE family business CEOs compared to US CEOs. In the light of its findings, the DIFC study stresses the importance, and recommends the writing of a family constitution that governs the family-business relations to avoid future conflicts and clearly define responsibilities and expectations among the members of the business. To further strengthen the foundations for future sustainability, the study also encourages family-owned enterprises to engage in a re-strategising exercise that ensures the balancing of the growth and diversification drive witnessed by many organisations in its early stages with the need to introduce sound governance models and organisational systems. It highlights the key significance of involving all stakeholders in this exercise. Dr Omar bin Sulaiman, DIFC Governor, said: "This study comes as part of the DIFC's efforts to provide sound and fact-based business intelligence that would help regional family businesses to cope with the pressures of change and succession-planning as well as assist the global business community to understand the needs and aspirations of UAE-based family businesses. "The Arabian Gulf is dominated by family businesses. Most of the family business in the UAE and the Gulf are still young and in transition phases. The family business faces many challenges such as globalisation, the growing number of family members in each generation, growth of the company, succession plans and business continuity." He said about 95 per cent of family businesses do not survive the third generation of ownership mainly due to lack of planning in the succession. Sulaiman said: "The DIFC has and will continue to always leverage its expertise and partnerships in providing innovative and useful business intelligence and business tools that will assist regional and international businesses and the financial services community to have better visibility and thus support smooth decision-making process." Dr Zeinab Karake Shalhoub, Director of Research, DIFC Investments, said the research showed that in the UAE, as well as in the US, CEOs generally perceived the practices, cultures and succession processes more favourably than other family members. She said: "UAE family businesses also exhibit stronger family influence in the business and greater challenges posed by generational succession; and the need for adaptation in a changing competitive environment." "The study identifies a number of areas for improvements and provides six major recommendations to UAE CEOs and family members including writing a family constitution; developing clear standards and processes for both managerial and ownership succession and adopting a holistic strategic planning approach." Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .