Succession Issues among Family Entrepreneurs in the Countries of the Gulf

Abstract

An entrepreneurs's lack of succession planning can lead to several failures, loss of jobs and a ripple effect on the economy. Small family business succession is gaining increased prominence particularly in Europe and the United States. In Arab societies, research projects on family entrepreneurial activities as well as family business succession have, however, been non existent. The fundamental reason for this stems from a cultural setting where an individual is gauranteed to emerge as a successor particularly when Arab families have large number of siblings and strong extended family relations. As many Arab societies are embracing Western values in terms of marriage and number of children per family, the issues relative to family business succession that are considered in the West will become major issues in Arab societies. This empirical study explores the transferability of theoretical constructs developed in an Anglo-American culture to the Gulf Cooperation Council (GCC) States. Cultural effects on succession are examined collectively within these six countries forming the GCC States where harmonious rather than contentious familial relationships are prevalent. The extent to which a family enterprise plans succession is positively affected by the propensity of the incumbent to step aside and the extent to which a family enterprise plans succession is positively affected by the presence of a competent successor. The findings suggest that a family enterprise that has decided to keep management control within the family cannot possibly hope to achieve this without family members who are trusted by the incumbent. The focus of this study is business succession in the GCC States, where critical issues of transition in small businesses need to be addressed.