Qatari family firms are set to be the key driver of the GCC growth in 2015, says a new research report, which estimates that family firms outperform non-family firms by an average of 15%.
The “unique strengths” of Qatari family firms hold important insights for economic forecasters, policy planners and business leaders looking for growth. Family firms represent around 75% of the private sector economy in the GCC, so their continued success is a vital contributor to overall GCC growth, Oxford Strategic Consulting (OSC) said.
The research found that Qatari family firms possess particular advantages that give them a unique competitive edge. Firstly, 50% of GCC family-owned firms are involved in more than five sectors, which means that they spread the risk, are more resilient to downturns in one sector, and can rapidly move into growth markets — although they can be spread too thinly.
“Qatari family companies also benefit from a distinctive leadership style,” which, OSC said, focuses on relationships and loyalty.
The most successful family firms are also unusually integrated with the government and consequently more aligned with their country’s objectives. Much of their economic success is related to providing stability and a strong cohesive link between national and private sector strategies and objectives.
“Yet Qatari family firms do face challenges. For example, a typical family business in GCC must grow at a rate of 18% a year in order to maintain the same family wealth across generations. Family firms also face difficulties when assessing family members, which can be a touchy subject, and ultimately determining a successor. Similarly, family firms often struggle with how to ‘fast-track’ sons into important leadership roles.
“It is clear that not all Qatari family firms follow strategies as they appear in traditional business textbooks. A family’s business strategy may, for example, be more concerned with preserving the family name rather than generating profits. It is precisely the unique qualities of these family firms that enable these companies to continue to defy expectations and serve as key drivers of regional growth.”
