Family Businesses in the Arab World

There is scarce knowledge about family businesses in the Arab world region as scant research effort has been directed towards studying this specific context. Although this may be explained by the limited number of family business researchers originating from this region and choosing it as a field of study, this gap remains surprising. Indeed, during the 30-year history of family business research, important research has been directed to studying family businesses in various non-western settings such as South America or Asia.

This chapter offers a review of key economic factors and challenges shaping the economic context in which Arab family businesses operate. Growth, exports, foreign direct investment (FDI), unemployment and countries’ governance are the main aspects analysed in this chapter. In a second step, the major economic opportunities and threats that Arab family business faces will be exposed.

The article identifies the distinct characteristics of family businesses in the Arab world and argues that management practice of Arab family businesses (AFB) differs significantly from previous testaments of international family business practices. It is also explained that constructs like Namus, Wasta, Diwan and Asabiyyah are vital to distinguish between international understanding of family businesses and Arab family businesses.

The differentiating factors of Arab clans are precisely the ones that provide competitive advantages and security from competitive pressures. Concepts of knowledge reservoir, social networking and emotional and symbolic capital have significant influence on family business practice in the Arab world. The main contribution of this article is to develop propositions as a way to both simplify and clarify the key constructs (Namus, Wasta, Diwan and Asabiyyah) in a middle range theory (Arab family business) with the approach of modelling-as-theorising and to define Arab family business.

This chapter focuses on the contribution of family capital (human, social, financial, and survivability capitals) to the resilience of the family firm along three dimensions: the absorptive capacity, the renewal capacity, and the appropriation capacity. Our objective is to show that the family capital is a strong determinant of the survivability of family firms that are claimed to be inherently resistant to change, particularly when facing environmental disruption.

We have adopted a qualitative approach based on five case studies with owner-managers of family firms in a North African country (Tunisia). The period of the survey (2011–2014) is characterized by a political revolution which led to unprecedented cuts in the Tunisian economy. This context provided an additional stimulus for greater organizational resilience.

The information was collected through semi-directive interviews with owner-managers of five family businesses. We concluded that the financial help provided by the family during the crisis has been acting as an accelerator for the development of some assets, including the share capital. By an increase of the share capital, the company can mobilize more financial capital. Our results show that the family firms’ social capital (relationships with external partners) is a key factor for the firm to absorb shocks, implement collaborative strategies, and internalize practices allowing them to cope with disturbances in similar future situations. The human, financial, and survivability capitals have also important contributions to the resilience of the firm and interact with the social capital in order to strengthen this resilience.

In spite of the significant role of family firms in most countries’ economies, researchers have paid a limited attention to organizational learning in these companies. In this chapter, we will focus on Moroccan family businesses trying to answer a central research question that is: “How do the specific attributes of Moroccan family businesses impact their individual and organizational learning dynamics?” To have a deep understanding of how these interactions occur, we conducted 30 semi-structured interviews in four Moroccan family firms. The results of the case studies show that every Moroccan family business is characterized by a dominant logic of action that can be either based on spirituality and emotions or on rationality and professional relationships. These logics are the result of traditions, religion and family culture, and because of their bivalence, their impact on individual and organizational learning dynamics can vary from one family business to another.

The last decades have been characterized by increasing attention to the internationalization of family firms. Investigations at the individual, team and organizational levels have been done with scarce attention to the context. Especially, the difference between developed and developing countries has been an under-researched topic. Drawing on the Uppsala model and through multiple case studies, this study investigates to what extent internationalization processes differ between family and nonfamily firms in developing countries. The findings suggest that the differences between family and nonfamily firms regarding the internationalization process are minimal, whereas there are a plethora of similarities in this process. The study found that there are no significant differences between family and nonfamily firms regarding psychic distance, foreign entry modes and networking behaviour. However, the study shows that liability of outsidership is higher in family firms than in nonfamily ones and that the performance and speed of internationalization are higher in nonfamily firms exclusively in the short run. Also, the findings show that the internationalization process of firms in developing economies has some unique characteristics which take different forms. For example, psychic distance does not play a significant role in foreign market selection; exports are the primary foreign market entry mode both in the short and long run; the selection and expansion in new international markets are an unstructured and random process; the learning process about international markets is slow; and finally the liability of outsidership is more robust in developing countries’ firms.

The role of women in family businesses is still an under-researched area, with existing research focusing on issues such as women’s roles, work-life balance and equality in terms of pay or careers. This paper seeks to understand the close interpersonal relationships of a small family business. It uses a case study approach to examine the dynamics and emotions at play within the firm and then develops a thought-provoking model of guilt to explain these dynamics. The case study examines an all-female family business in Egypt (Sharm-el-Sheikh). It is a small women’s wear business started and managed by the mother with both daughters employed. Using narrative inquiry, the research explores this family at a crucial turning point, following the business through near bankruptcy to ‘seeing light at the end of the tunnel’ before finally closing. The business achieved its recovery by professionalizing and changing ownership structures, aided by open communication and the recognition of roles and responsibilities. The research, conducted over a 2-year period starting in 2010 and ending in 2012, provides initial insights into the process through which family businesses are bound by guilt and love—emotions which exist simultaneously and which are reflected in the indviduals, the businesses and the family members’ lives. Suggestions for future research are also given. These include replication of the study in developed countries and other cultural contexts as well as development of a deeper understanding of the emotions of love and guilt in the context of working within and entering into family firms.

During the last decade, Lebanese family firms have been experiencing many challenges related to two waves of political crises. The internal wave was after the assassination of PM Rafic Hariri and dated from 2005 till 2010. The external one began in 2011 due to the tension of the Syrian civil war. Based on 154 pairs of family and nonfamily firms, this study has the aim to explore the impact of both internal and external political troubles on financial dimensions (financial performance, capital structure and investment strategy) of Lebanese family firms.

The results reveal that Lebanese family firms have a higher financial resistance than their counterparts. They outperform their nonfamily counterparts during internal and external political crises. They use debts, with more preference for long-term loans, to maintain their control over their business and preserve a dynamic investment strategy even in periods of internal and external political troubles.

The aim of the chapter is to analyse the effect of the institutional environment on the financing of Tunisian family firms. Two factors are considered. The first consists of the regulation of investments and the economic initiative. The second considers the level of corruption. This effect is highlighted using a sample of 41 listed and unlisted Tunisian family firms over the period 2007–2012.

The results show that regulated sectors are negatively associated with debt access. This is further confirmed in the post- and prior revolution periods for family firms. The corruption index does not give significant results, although the negative coefficients demonstrate reluctance regarding debt. On the other hand, the ownership structure adopted by family CEOs and institutional investors improves debt. A possible explanation for the paradox is that the advantages taken from regulation substitute the debt requirement. In the other case, the relational advantage prevails.

This chapter examines the role of governance as a determining factor of foreign investors’ decisions as for investing in Tunisian listed family firms. To achieve this goal, first, two distinct forms of family involvement in firms are studied: family ownership and family management. In addition, this research assesses the role of various indicators of family firm governance on foreign investors’ decision to invest in Tunisian listed family firms: board of directors’ independence, the presence of a second major nonfamily shareholder and CEO duality. A sample of 27 firms listed in the Tunis stock exchange from 2007 to 2014 has been used. It is found, on the one hand, that foreign investors seem to avoid investing in firms with high family ownership as well as in those where the family is involved in management; on the other hand, the board of directors’ characteristics as well as the presence of a second major nonfamily shareholder do not affect the decisions of foreign investors in Tunisia.

As family businesses in the Arab world in general and the GCC countries, which are part of the Middle East region in particular, present an exceptional situation compared to other countries over the world, this chapter covers family business dynasties and the importance of succession, family business characteristics in the Arab-Middle Eastern context, and succession in dynastic family businesses in the Middle East. This chapter will also focus on some other Middle Eastern countries outside the GCC such as Lebanon and Jordan. It will focus on many aspects distinguishing these types of businesses such as patriarchy, gender inequality, the role of women, succession, Islamic laws, and the dominance of family members in family businesses compared to nonfamily businesses. This chapter will pave the way for further studies to investigate whether this part of the world still experiences any obstacle in those areas or whether it has accomplished equality with the other parts of the world.

This is a descriptive study of succession planning based on 285 questionnaires collected from family-owned small and medium enterprises (SMEs) in Saudi Arabia. This study is the first major descriptive study of family businesses in Saudi Arabia. Our results are compared to previous family business research conducted in other countries. Implications for family business literature, policy and practice are presented.

In the present day, the term “Arab world” could be related to the geographical area occupied by 22 countries that form the Arab League1 in Africa and the Middle East with a population of 422 million people, more than half of whom are under 30 years old. To be inclusive, beyond the Western stereotype, the Arab world is about Arabs but also about Berbers, Kurds, and Egyptian Coptic Christians, among others. It is about Islam but also about pre-Islam polytheistic religions and other faiths that emerged as monotheist religions in the region. It is about the Arabic language but also about other languages, dialects, and colonial influence across the geography. The Arab world is a mosaic of incredible identities formed by religions, cultures, languages, traditions, faiths, political systems, geographies, history, and artistic expressions. It is also about diasporas dispersed around the world. It is unity through diversity. For the individual navigating this amazing context, identity becomes a paradox of conflict and peace, stability and instability and certainty and uncertainty. However, the glue that ties the building blocks of identity is the family—the family as a nuclear system that carries the past, the present, and the future of social, relational, emotional, and economic expectations.