Business means family business in the Gulf Cooperation Council – comprising the six states bordering the Persian Gulf, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Among the best known are such firms as the Kanoo Group in Bahrain and the Al Masaood Group in the UAE. Many, such as Obeikan, the Al Khorayef Group and the Zamil Group, come from Saudi Arabia, which is by far the region’s most populous country.
Many of these companies are still young compared to western family firms, and a large proportion were created as the region became rich on the back of oil wealth in the second half of the 20th century. Thanks to limited international competition (see government policy section below), high liquidity and easy access to both capital and labour, many family businesses in the GCC, which were typically established as trading firms, have grown into conglomerates with interests in several sectors spanning construction to retail, financial services and hospitality.
The region’s cultural heritage gives them a number of advantages. A strong tradition of privacy, for example, ensures any family feuds are kept under wraps, limiting the negative impact they can have on the firm. Succession is also a less contentious issue than it can be in Europe or North America, as the line of succession is normally widely accepted within the family – if the owner dies, the oldest surviving brother takes over.
However, the biggest challenge seems to be corporate governance. Fewer than one in four GCC family firms disclose their financial information and less than 10% have a corporate governance committee. The resulting lack of transparency will become more pressing if these businesses want to raise money from non-family investors to boost growth and expansion. Strong instincts about keeping things in the family could also make it harder to bring in outside know-how, which could be invaluable as these businesses spread to other parts of the world.