Internationalization of Family Businesses in U.A.E.
The British University in Dubai (BUiD)
Family Businesses (FBs) are the backbone of the UAE economy as they contribute to more than 90% of the economic activity in the country. Due to the heavy weight of FBs in the UAE economy, and the need for local companies to go international I chose “Internationalization of Family Businesses in UAE” as a topic for my dissertation. FBs are very vulnerable to time; many people involved in FBs believe that only 70% of Family Businesses make it to the second generation and around 10% make it to the third generation. This research paper aims at outlining the growth factors for Family Businesses to grow into international businesses. It will further investigate the importance of those factors to FBs in UAE that are seeking internationalization. In this report I have used the following definition by Naldi et al. (2007) to define a FB: firms where one family group controls the company through a clear majority of the ordinary voting shares, the family is represented on the management team and the leading representatives of the family perceives the business to be a FB. The literature review revealed that for a FB to become international it should have the capacity to sustain growth. The factors contributing to sustainable growth in FBs are: assure fresh strategic insights, attract and retain excellent non-family managers, create a flexible and innovative organization, create and conserve capital, prepare successor for leadership, and exploit the unique strategic advantages of family ownership. In my research I chose to use the case study approach. Some of the unique advantages that case studies offer are the ability to understand the nature and complexity of the situation and it is an appropriate way to research an area in which few previous studies have been carried out. The criteria of selection used are for the Company to have been created via an entrepreneurial venture by the Emirati owner, and where the owner or owning family is involved in managing the business. Only three companies accepted to participate in the case study; one has only domestic presence with no intent to go international, a second with only domestic presence but intends to go international in the future, and a third that already generates 30% of its revenue from its international operations. The case studies were conducted through semi structured interviews with high level management. The case study was successful in establishing a positive relationship between three of the factors for sustaining growth of FBs, they are: Assuring fresh strategic insights, attracting and retaining excellent non-family managers, and creating a flexible and innovative organization. As for the other three factors, the case study did not succeed to establish any relationship with the ability to sustain growth.
internationalization, family businesses, United Arab Emirates (UAE), UAE economy