Family firms in Gulf region, which represent around 75 per cent of the private sector economy, will outperform non-family firms by an average of 15 per cent during the year 2015, a new research report has said.
The unique strengths of Gulf Cooperation Council (GCC) family firms hold important insights for economic forecasters, policy planners and business leaders looking for growth, the Oxford Strategic Consulting (OSC) research has found.
Family firms represent around 75 per cent of the private sector economy, so their continued success is a vital contributor to overall GCC growth, report said yesterday.
50 per cent of GCC family owned firms is involved in more than five sectors which means they spread risk, are more resilient to downturns in one sector, and can rapidly move into growth markets, although they can be spread slowly.
GCC family companies benefit from a distinctive leadership style which OSC terms as the Gulf Arab Leadership Style.
OSC research found that this leadership style focuses on relationships and loyalty, which positively impacts employee engagement, productivity and retention.
The most successful family firms are also unusually integrated with the government and consequently more aligned with their country's objectives.
Much of their economic success is related to providing stability and a strong cohesive link between national and private sector strategies and objectives. Yet GCC family firms do face challenges.
In order to maintain the same family wealth across generations, a typical family business in GCC must grow at a rate of 18 per cent a year. Family firms also face difficulties when assessing family members, which can be a touchy subject, and ultimately determining a successor.
Similarly, family firms often struggle with how to 'fast-track' sons into important leadership roles.
However, family firms are the backbone of the Gulf economies with generating an estimated 80 per cent of non-oil gross domestic product.
