Sustainability of Family Business Entrepreneurships in the Middle East

Sustainability of Family Business Entrepreneurships in the Middle East

Bassem E. Maamari, Ahmad M. Jannoun
Copyright: © 2017 |Pages: 20
DOI: 10.4018/978-1-5225-2066-5.ch001
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Abstract

The sustainability of family businesses with their integral component of entrepreneurial venturing are the result of decades of developmental processes. The role that these family businesses play in any economy can only be described as massive. Therefore, understanding the factors that affect or play a role in the success and continuity of these firms is important, and assessing the level and role of corporate governance in this perspective remains a challenge. The interplay of systems, leadership, accountability, transparency and remuneration, is proving to play a role in family business sustainability.
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Issues Confronting Family Businesses

Generally speaking, many organic as well as operational problems affect the operation of family owned and family run businesses, from governance to generation gap, from attrition to financial and managerial non-effectiveness.

Governance Problems

Family business is more complex to manage than non-family managed firms. The governance difficulty emanates as the owner is assisted with his/her immediate family in the first generation. These members of the family represent the pool among which the selection of the next CEO will take place. However, these family members are close to each other, they know the strengths and weaknesses of each other so well, that there will always be someone who approves or does not approve any decision taken by the new CEO (who was selected from the group of second generation owners). There is in general a feeling whereby many feel they would have done differently were they to take the same decisions. Moreover, the increase in pressure to audit, or to review and control for past decisions may be taken as a personal attack on the CEO. This may result in family members choosing either to smooth-down the process, or to split the family, where both options damage both the firm’s governance as well as the inter-family relationships.

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