Abstract
Academics and professionals have recognized the importance of family-controlled firms in global economies. Some findings illustrate that such businesses make major contributions to owners and shareholders. However, family-owned firms have presented corporate governance and sustainability challenges, as well as opportunities not witnessed in other companies in which ownership tends to be diverse and management is drawn from external sources.
The study rationale is based on the ongoing generational change in Qatar family-owned firms. As founders retire, new generations take over, but numerous unresolved family challenges and a lack of meaningful succession plan continue to face new owners or managers.
This research has two broad objectives to address issues of corporate governance and long-term strategies of family-owned businesses in Qatar. First, it aims to determine awareness and understanding of corporate governance issues and current practices among Qatar family-owned businesses; and secondly, to assess practices for long-term strategies, benchmarking, and moving into the next era. It is observed that these study objectives will be sufficiently addressed by study questions.
The literature on family-owned businesses is abundant, but not much covers Qatar. A theoretical framework for this study is based on agency and stewardship theory, principal-principal-agent theory, and multiple agency theory, which highlight various relations between owners and other actors.
The methodology for the study is descriptive to collect data from various family-owned businesses in Qatar. Data collected will be analyzed using Excel do identify valuable insights. The study implications will assist family-owned business owners and managers to enhance corporate governance, management practices, and sustainability.
Governance for Qatar Family-Owned Businesses and Moving into the Next Era
Introduction
Family-owned businesses are the major forms of business entities in Qatar, and they constitute a significant percentage of the country’s companies. The importance of family-owned businesses are known to influence certain corporate governance issues and opportunities not always assessed in companies with diverse ownership and management approaches. Hence, discourses about family-owned businesses tend to focus on unique corporate governance issues that such firms face (Litz, Pearson, & Litchfield 2012; Emerole 2015).
It is imperative to recognize that business ownership involving families could be regarded as a threat or an opportunity based on a wide range of factors. Value can be seen in family commitment to the business, particularly when the diverse needs of various investors are adequately addressed. In some instances, however, investors often tend to distrust family-owned businesses because of possible eventualities. As such, investors are most likely to assess such entities before making critical investment decisions.
In most cases, family-owned firms tend to have highly individualized ownership, poor governance, and lack of transparency, accountability, and fairness that could lead to unfair practices and abuse of minority owners. Investors require the right corporate governance practices in family-owned businesses to address their interests.
This research proposal applies principles of business management to addresses some corporate governance issues witnessed in Qatar family-owned businesses.
For several decades, family-owned businesses in Qatar have been critical in driving the growth of the country’s economy, and they are certainly vital components of the private sector. However, the future success of most family-owned businesses remains elusive and not guaranteed. Further, today, most families owned entities face many challenges from various sources, including corporate governance.
Research Rationale
Many families controlled by businesses in Qatar are now experiencing generational change. Business founders are now passing management roles to their family members. However, there are numerous unresolved family challenges and a lack of meaningful succession plan, which is now responsible for family wrangles. Besides, family-owned businesses must now deal with the issues of implementing long-term strategies to grow and survive amidst competition. Such strategies must account for the current business landscape, as well as the interest of family owners and managers.
In most instances, succession issues lead to fragmentation and constant conflicts due to a lack of effective structures to support the transition. Successful family-owned businesses, therefore, require sustainable and well-developed management structures to ensure that they can move into the next era and succeed where other similar businesses have failed. It is imperative to recognize that family business owners also understand the need for better corporate governance practices and business sustainability across generations.
Objectives
This research has two broad objectives to address issues of corporate governance and long-term strategies of family-owned businesses in Qatar.
- To determine awareness and understanding of corporate governance issues and current practices among Qatar family-owned businesses
- To assess practices for long-term strategies, benchmarking and moving into the next era
Research Questions
- What are the current issues and priorities for Qatar’s family-owned business?
- Is the business run by a functional Board of Directors?
- What is the family governance approach?
- What are measures in place to ensure transparency and accountability?
Critical Literature Review
From a general perspective, corporate governance reflects business practices that account for the interests of shareholders and stakeholders. It offers a wide range of rules and regulations and voluntary standards to manage the cooperation and relationships among various actors and the entity, such as owners, directors, and stakeholders (Nixha et al. 2015). Better corporate governance tends to balance the diverse interests of various parties. Within the context of a family business, strong corporate governance measures can guarantee a productive and sustainable business growth while advancing positive relationships with various shareholders and the management team, who may be family members or ‘outsiders’.
Numerous studies about family-owned businesses are available to provide solid, helpful suggestions to guide this research. They focus on various issues, including theoretical background (Gulzar & Wang 2010) and better performance (Poutziouris 2004). Poutziouris (2004), for instance, studied some family-run firms listed on the London Stock Exchange and established that they performed better than other listed non-family firms did. However, better performances of family-controlled firms were linked to aligned interests of management and shareholders. Consolidated shareholding has provided better returns and superior performances relative to firms with fragmented ownership. The success of family-owned firms has been attributed to several factors, including long-term strategic vision, effective management and control approaches, better focus on interests of shareholders and management, and concentration on core business activities (Ernst & Young 2015).
A study conducted by Anderson and Reeb (2003) showed similar results. Large, publicly-traded family-owned businesses in the US performed better relative to non-family businesses within the industry (Anderson & Reeb 2003). Moreover, such firms also tended to have significantly higher valuation too. In this, Anderson and Reeb (2003) observed that the US firms were focused on using independent monitors to manage the effects of family dominance on the business.
Theoretical Frameworks
Governance remains critical for the success of family-owned firms. Stewardship and agency theory offers robust theoretical foundations for understanding family-controlled businesses. The theory has allowed business owners to understand agency implications, particularly costs and relationships between family owners and non-family managers in their family-owned businesses (Wright & Kellermanns 2011).
Further, robust principal-principal-agent theory and multiple agency theory have emerged to account for listed family firms. These theories tend to address differences between family firms and non-family entities, as well as unique environments in which family businesses are managed. The multiple agency theory also highlights several governance roles of similar actors in the company’s governance system (Wright & Kellermanns 2011).
Further, research also shows that corporate governance for family-owned business now requires responsible leadership at different levels to support various practices. To this end, regulators, the board, management, and auditors have vital roles to play to prevent possible corporate drawbacks while enhancing better corporate governance for improved performance and firms’ sustainability (Sookram 2016).
New perspectives
The issue of generational change and its impacts on family-owned businesses in the region is not well explored. Unresolved family problems, poor succession planning, and governance, and long-term strategies to compete in the new era remain critical challenges and poorly understood (Mashood 2013).
Methodology and Methods
Research Design
A descriptive survey research design is preferred for this research. This would ensure that data could be obtained from various sources using different methods, such as questionnaires, face-to-face interviews, and analysis of secondary data. This approach would enhance the reliability and validity of the collected data.
Research Context
This research will be conducted among family-owned businesses located in Qatar. For this study, a family-owned firm is regarded as a business generally controlled by family members, managed by family members or a representative from the family, and having shareholding of not less than 25% with a family member among the board members for listed entities.
Listed family firms, such as Aamal Company and others will be selected for the research because these companies are increasingly encountering new challenges related to governance and sustainability. The management teams from these firms would be sampled to provide valuable insights required for the study. The choice of firms and their respective managers for the study will be based on accessibility and willingness to discuss governance issues and succession.
Procedure
This study may require participants to discuss transparency and accountability in the family business. Such topics are most likely to raise ethical concerns among respondents and, therefore, they could present data collection challenges during the research. Respondents will be however informed that all collected data shall be used for the study only, and they will remain confidential.
Data Collection Method
An interview questionnaire would be used to collect data from participants. The study instrument would focus on corporate governance issues and best practices for family-owned businesses to move them into the future. Besides, desktop research would also be used to gather secondary data. The survey will aim at gathering data on perceptions of owners or business proprietors of family-owned businesses in Qatar.
Data sources
About 30 managers or owners of family-owned businesses in Qatar would be interviewed. Suitable firms will be selected from the Qatar Chamber of Commerce and Industry, Doha, Qatar. It is believed that this number of the sample would be sufficient to give meaningful results.
Methods for Data Analysis
Descriptive analyses will be conducted to determine means, median, and frequencies. For instance, the percentile findings for corporate governance and succession practices across firms will be presented. Also, thematic analyses would be conducted to determine the major issues of the study.
Discussion
The significance of this proposed research is based on the notion that it will bring new findings of family-owned firms in Qatar because they continue to evolve and face new challenges. Thus, the findings will focus on best practices to ensure that these new businesses can thrive and move into the next era.
Research Limitations
This study will be based on subjective responses provided by family business owners or managers and, therefore, results may not be applicable in other regions, for instance, outside the Gulf region.
Provisional Work Schedule
Reference List
Anderson, RC & Reeb, DM 2003, Who Monitors the Family?, Web.
Emerole, G 2015, ‘Analysis of Factors Affecting Performance of Family-Owned Businesses in Abia State, Nigeria’, IOSR Journal of Business and Management, vol. 17, no. 6, pp. 34-37. Web.
Ernst & Young, 2015, Staying power: how do family businesses create lasting success?, Web.
Gulzar, MA & Wang, Z 2010, ‘Corporate Governance and Non-Listed Family Owned Businesses: An Evidence from Pakistan’, International Journal of Innovation, Management, vol. 1, no. 2, pp. 124-129.
Litz, RA, Pearson, AW & Litchfield, S 2012, ‘Charting the Future of Family Business Research: Perspectives From the Field’, Family Business Review, vol. 25, no. 1, p. 16 –32. Web.
Mashood, S 2013, ‘Taking Qatar’s Family Businesses into the Next Era’, The Edge, Web.
Nixha, A, Hashani, A, Abdixhiku, L & Mustafa, S 2015, Corporate Governance in Family-owned Businesses in Kosovo, Reiinvest Institute, Kosovo.
Poutziouris, PZ 2004, ‘Views of Family Companies on Venture Capital: Empirical Evidence From the UK Small to Medium-Size Enterprising Economy’, Family Business Review, vol. 14, no. 3, pp. 277-291.
Sookram, R 2016, ‘Corporate Governance in the Emerging Economics of the Caribbean: Peculiarities, Challenges, and a Future Pathway’, Journal of Values-Based Leadership, vol. 9, no. 1, pp. 1-18.
Wright, M & Kellermanns, FW 2011, ‘Family firms: A Research Agenda and Publication Guide’, Journal of Family Business Strategy, vol. 2, pp. 187–198. Web.