Family businesses in Middle East outperform global counterparts

The increasing role of women in executive roles is being heralded as one of the contributing factors to family business success in the Middle East, with new PwC figures revealing family businesses in the region are outperforming family businesses globally.

The Global and Middle East Family Business Survey 2012 also said Middle Eastern family businesses had been less affected than their international counterparts by the ongoing global economic situation.

According to the survey, 83% of Middle Eastern family businesses experienced growth in 2012, compared with figures of 65% globally. Retail, manufacturing and construction revealed particularly strong growth.

Unveiled at a joint forum with the Dubai Business Women’s Council, the survey questioned 65 family business executives from the region, out of a total 1,952 from around the world.

Entrepreneurial and private clients leader for the Middle East at PwC, Amin Nasser, said there had be a paradigm shift over the past 20 years in the role women play in the region’s family firms. Higher standards of education coupled with improved economic conditions and financial opportunities had resulted in women contributing significantly more towards the growth and success of family businesses than before.

According to figures released last year, 32% of family businesses in the region had female board members, compared with only 1.5% of listed companies.

President of Dubai Business Women’s Council, Raja Easa Al Gurg, said women were proving their leadership skills and business capabilities and government and society were seeking ways to promote women entrepreneurship as a result. Last year, for example, the United Arab Emirates made it compulsory for corporations and government agencies to include women on their boards of directors.

Nasser said family businesses in the region did not perceive the global financial situation be a threat to the same extent as their international counterparts. In 2010, 71% of Middle Eastern respondents cited external markets as one of their top concerns for the family business but this had dropped to 45% by 2012.

Government policy and regulation was of slightly more concern, with 46% of respondents listing it as a big external challenge. Globally 54% of family businesses listed external markets as their top concern.

“Compared with the rest of the world, family businesses in the Middle East are less fazed by the general economic situation,” Nasser said. “This has created a strong framework for family businesses to continue targeting ambitious goals, bringing stability to a balanced economy."

Looking ahead, 69% of family businesses in the region anticipate steady growth while 23% anticipate quick and aggressive growth. Only 9% anticipate a reduction in sales over the last year compared to 19% globally.

Perceived challenges noted by survey respondents included family conflict, which one in five anticipated could be a problem over the next five years. The survey revealed 23% of family businesses in the region did not have procedures in place to deal with conflict. Only 42% of family businesses had a shareholder agreement.