Entrepreneurship & Family Business Innovation in the UAE

Question: Discuss about theEntrepreneurship Family Business Innovation in the UAE. Answer: Introduction The major driver of any economy is the entrepreneurship, as it not only creates the job opportunities for others, but also contributes to the wealth of the economy. The fact that family business helps in ensuring that the entrepreneurial activities flourish for the coming generations, is not well known (Zgheib, 2017). In the following parts, a discussion has been carried on between how these two overlap each other. A specific emphasis has been given on the challenges and opportunities which are faced in UAE by the family business entrepreneurship. This has been done to establish that the family businesses innovations drive the economy of UAE. Discussion The definition of family business is very contextual, though, it can be said that a family business is one in which the majority voting remains in the hands of the family controlling the business, which is comprised of the founding fathers of the business and their heirs (May, 2015). The literature on family business covers the various issues regarding the transmission and succession of the business, where the focus has been over the issues like wealth management and governance for sustainability (Ezziane, Mazzawi Leleux, 2013). Over 80% of business in the Middle East is owned or controlled by such families who started as entrepreneurs, and later on diversified the interests of their business (Thomas, 2016). The majority of such businesses were incepted in the beginning of 1960s. However, their continuity is a matter of concern due to the generational changes that they have to face on rotational basis, and this is set to come as a problem in the next 5 to 10 years. The family businesses are not only strong but also unique in nature; moreover, they are crippled with the complexities. In addition to this, the same challenges are faced by such business, which a normal business faces. Furthermore, with the growth and expansion of business, as well as, the family, a range of specific problems are to be dealt with. The challenges of operating in intricate global economic environment are to be managed, which are coupled with the foreseeable changes in the generation (PwC, 2017). The conflict between the families al so poses a challenge for such businesses (PwC, 2016). As per the reports by Kets de Vries, 33% of the family businesses are able to carry on beyond the 1st generation, and a mere 10% survive past 3rd generation. In a similar manner, Astrachan and Shanker had showcased that 33% of the founders of the family business are able to make it to the 2nd generation, and this percentage drops to 12% for 3rd generation and by the 4th generation, this percentage shrinks further and comes up to a bleak 3%. In a family business, longevity fascinates the researchers. The intention to continue with the vision of forefathers and the intent to pass it on to the coming generations works in the favor of family businesses. So, even though the founders may not continue beyond 3-4 generations, but their vision is continued by the following generations. In other words, the long-lived family businesses continue to maintain their entrepreneurial orientations (Ezziane, Mazzawi Leleux, 2013). The key challenges faced by the family businesses come from within such businesses. And so, in order to grow, the internal challenges have to be dealt with, to ensure expansion and growth of the business. To do so, the family businesses have to make certain that they have fresh strategic insights; are able to attract, as well as, retain the key non-family managers; create and conserve their capital; create an organization which is both flexible and innovative; exploit the strategic advantages which are unique to their family ownership; and lastly, prepare a suitable successor for leadership (Khansaheb, 2008). There are various successful examples to show that the family businesses innovations are one of the key drivers of the UAEs economy. Most of the big companies in the Middle East are controlled by families. Moreover, some of the largest Western brands are managed by the local family businesses as franchise operations. But, the Seddiqi family has built on its own brand and legacy and has been immensely successful. Ahmed Seddiqi Sons represents over 60 luxury timepiece brands across 65 locations in UAE and is a trusted destination for jewellery and luxury watches in not only UAE, but also in the entire Middle East (PwC, 2016). The company, which was formulated in 1940s later half, continues to be owned and run by family (Bayt, 2017). Even after four generations, the company continues new ventures in real estate, education and healthcare services, through its holding company. Tapping on treating the customers as a long term friend, the company has maintained its significance since 1950s. Moreover, the family oriented working environment has further contributed in the companys success. Osama Ibrahim Seddiqi sits on Seddiqi Holdings Executive Committee and Board of Directors. And even though it is a family run business, they have recognized the value of bringing in skilled professionals from outside, which has helped them in overcoming the challenges faced by the traditionally run family businesses (PwC, 2016). The example of the family businesses innovations by the Seddiqi family has contributed widely to the economy of UAE. It has not only created more job opportunities in UAE, by expanding their business in different field, but through entrepreneurial ventures also, they have contributed in the economic growth of the nation. The example of Seddiqi family and their comparison with the traditionally run family businesses, depict how they have continued their business successfully and the manner in which they have dealt with the key challenges being faced by such businesses. Examples like these are the reason why the UAE is amongst the top economies of the world, at present. Conclusion In the preceding parts, the various opportunities and challenges which are faced by the family business entrepreneurships, with a specific emphasis on UAE had been highlighted. Through this discussion, it can be summarized that even though such businesses have a number of challenges, but by adopting the suggestions covered earlier, they have been able to successes. Moreover, the Seddiqi family presents as a successful example of the immense contribution of family businesses innovations towards the UAEs economy. This helped in establishing that the family businesses innovations drive the economy of UAE. References Bayt. (2017). Ahmed Seddiqi and Sons. Retrieved from: https://www.bayt.com/en/company/ahmed-seddiqi-and-sons-1470867/ Ezziane, Z., Mazzawi, E., Leleux, B. (2013). Entrepreneurship in Family Business: Emerging Storyline 2. International Journal of Trade, Economics and Finance, 4(3), 164. Khansaheb, A. (2008). Internationalization of Family Businesses in U.A.E. Retrieved from: https://bspace.buid.ac.ae/bitstream/1234/302/1/20050020.pdf May, P. (2015). Governance Code for Family Businesses. Retrieved from: https://www.kodex-fuer-familienunternehmen.de/images/Downloads/Kodex_englisch_2015.pdf PwC. (2016). Keeping it in the family: Family firms in the Middle East. Retrieved from: https://www.pwc.com/m1/en/publications/family-business-survey/middle-east-family-business-survey-2016.pdf PwC. (2017). Family Business. Retrieved from: https://www.pwc.com/m1/en/services/family-business.html Thomas, A.S. (2016). Mahmood Shaikhani, Managing Director, Shaikhani Group On Running (And Growing) The Family Business. Retrieved from: https://www.entrepreneur.com/article/286822 Zgheib, P.W. (2017). Entrepreneurship and Business Innovation in the Middle East. Pennsylvania: IGI Global.