Family enterprises key players in the UAE’s economy
Family enterprises are a force to reckon with, whether they are multibillion dollar multinational companies or local mom-and-pop shops. Many of today’s successful family enterprises once started off as small shops, expanding exponentially to cater to global consumers with their stream of innovative good and services.
Illustrious examples include electronics giant Samsung, one of the world’s largest pharmaceutical company Roche, luxury goods conglomerate LVMH, cosmetics giant Estée Lauder, car manufacturer Volkswagen, and multinational retail corporation Walmart.
Research published in 2017 by the Family Firm Institute highlights the importance of family enterprises in the global economy. They represent two thirds of total businesses worldwide, in addition to generating 70-90 per cent of annual global GDP and employing 50-80 per cent of the workforce in most countries.
Another 2019 survey by the Family Capital estimates that the top 750 family enterprises generated $10.3 trillion and employed 33.6 million people worldwide. In the Middle East, it is estimated that family enterprises make up 60 per cent of the region’s GDP, whilst employing 80 per cent of the total workforce, according to a study by PwC.
Family enterprises have proven to be key players in economies, generating enormous commercial value, creating job opportunities, providing essential goods and services, and elevating their communities through multifaceted philanthropic contributions. Considering their unique portfolio, governments can gain much from placing family enterprises as a key priority in their agendas.
As a start, it is imperative to form a multifunctional task force at the Centre of government, consisting of policymakers, economists, and family business leaders to analyse the unique challenges facing family enterprises in today’s unique economic landscape.
This would ensure customised solutions, policies, and regulations are formulated with maximum intended impact. Yearly round-table discussions with each sector’s family business leaders would yield exceptionally useful insights with regards to their challenges, opportunities, and preferred solutions.
Additionally, facilitating financing opportunities will ensure innovative start-ups, ventures, and international partnerships flourish in local markets and new territories.
As family enterprises face increasing competition from global players and new technological advancements, it will also be important to offer grants, subsidies, and incentives to support research and innovation. Subsidising training programs relevant to future skills and sectors will also propel these enterprises to be future-proof.
Engaging family enterprises with government-led strategies and economic projections will ensure they are in-line with national priority sectors in order to capitalise on market prospects. Many governments have special procurement schemes targeting local businesses, which offer a unique opportunity for successful public-private partnerships.
Successful service delivery by the private sector is present in many of today’s priority sectors, such as education, retail, infrastructure, hospitality, agriculture, and health care. Numerous governments have set-up schemes aimed to support local businesses to expand overseas.
There are several offerings under this scheme, such as publishing comprehensive market data by country, partnering local businesses with foreign investors, offering tax cuts and subsidies, issuing detailed export guidance, and capitalising on the wide-ranging network of free trade agreements with other countries.
Talents are becoming increasingly essential to a firm’s success and hiring skilled individuals is an important factor in a family enterprise’s prosperity. The unique governance system of family enterprises requires talents to navigate through its nuances in order to successfully deliver on its ambitions.
Current renowned executive education programmes are delivered by the Harvard Business School and the IMD Global Family Business Center. Courses discuss topics that are especially important to family business employees, such governance models, succession planning, conflict management, growth strategies, and wealth management.
Furthermore, many governments have resorted to publishing valuable information, training content, and useful resources on online information platforms dedicated to family enterprises. In turn, this will inspire them to conceptualise innovative goods and services, whilst managing complex day-to-day operations.
Sector expertise can also be accessed through smart partnerships with local and international industry pioneers. Increasingly, it will be more important than ever to expedite digital technology investments, which will enhance service delivery and allow expansion into a digital commerce.
According to the latest statistics from the Family Firm Institute, family firms account for two thirds of all businesses around the world, generate around 70-90 per cent of annual global GDP, and create 50-80 per cent of jobs in the majority of countries worldwide (Family Firm Institute, 2017).
According to the latest statistics from the Family Firm Institute, family firms account for two thirds of all businesses around theworld, generate around 70-90 per cent of annual global GDP, and create 50-80 per cent of jobs in the majority of countries worldwide (Family Firm Institute, 2017).
Perhaps the biggest challenge to a family enterprise is succeeding and transferring ownership for generations to come. A wealth of world-class guidance can be shared with family enterprises on various governance structures, succession planning approaches, and conflict management tips to ensure smooth day-to-day management and transitions from one generation to the next.
At the same time, it is important to engage the younger generation with the family business through emphasising the company’s values, enrolling in specialised training programs, and embarking on job rotation opportunities in different departments of the company.
Throughout history, family enterprises have been a vital economic engine, delivering breakthroughs, inventing useful goods and services, and bettering societies through charitable activities. Understanding their unique challenges and opportunities will enable policymakers to multiply their value to both the economy and society.
Published in Gulf News.
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