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Family businesses are a driving force of many economies around the world. Some of these businesses have a rich, multi-generational legacy that comes with their names. However, the histories of family businesses is a topic left largely unexplored by both academic circles and business communities, which is why the collaboration between Tharawat Family Business Forum, a unique organization in the region dedicated to organizing activities and offering support to family businesses, and New York University Abu Dhabi (NYUAD), is particularly meaningful. The collaboration is called Family Business Histories (FBH), and it is a research project dedicated to “mapping family business legacies” in the Middle East, North Africa, and South Asia (MENASA) region, according to the project’s website.
The FBH project has, at the time of writing, three in-depth case studies and various articles published, with more to come, according to Farida El Agamy, general manager at Tharawat, and Israa Mahjoub, research associate at NYUAD. In a webinar hosted by Business Forward and moderated by Randa El Bedawy, associate professor of management at AUC School of Business, El Agamy and Mahjoub were invited to speak about their project, as part of the School’s year-long initiative to shed light on family businesses.
FBH is a unique model, as El Agamy pointed out, as such research projects are typically limited to the academic sphere. FBH, on the other hand, bridges academia through NYUAD with the private sector through Tharawat. She explained that “very stringent and high-quality research” comes from NYUAD while Tharawat brings to the fore the “practical questions” that exist on the ground. Mahjoub complemented this viewpoint, commending the experience of venturing beyond academia and pointing out that exposure to the private sector has taught the researchers “how to frame research in practical ways”.
The project, at its core, aims to preserve history with a view to inspire future generations of business leaders through “historic learning”. El Agamy notes, however, that such a task is not so straightforward, as “difficult times” have led to losses in documentation and “interrupted stories”. “We live in a region where our relationship with history is not an easy one to access,” whether it be social or personal or geopolitical, the Tharawat manager said. She also described the value and importance of history as “underestimated”. Because of this, preserving the “linear reflection and memory” of family businesses becomes doubly important.
A global phenomenon
The prevalence and importance of family businesses to the economy is not something limited to the region. On the contrary, family businesses play a major role in the global economy; according to El Agamy, family businesses contribute 70-90 percent of global GDP. In Egypt this contribution is [about] 60 percent, while in the GCC family-run commercial activities make up 98 percent of commercial activities in the private sector. Clearly, family businesses are a major force in the private sector.
Family businesses are not just small or medium-sized enterprises. Many of them are well-known brands, El Agamy mentions Merck, Mars, Ford, and Samsung as examples. She adds that, in places like Japan, there are lesser-known but very old brands that are over 1000 years old. Such family businesses, whether young or old, large or small, are “very, very important” from a societal perspective, El Agamy says. Family businesses are “pillars” of the region’s economy in terms of wealth creation, employment, and welfare. She explained that “when you combine size and longevity you create an entire ecosystem that thrives around this family enterprise.”
The research: methodology, challenges and more
“A lot of the historical research goes into clarifying the future” and “giving a sense of direction to companies,” Mahjoub said. This process of trying to understand the past is at the heart of this practice, and is, according to the researcher, an “incredibly difficult promise” that “cannot be done exhaustively” but is always being worked towards. The project tries to not only create an understanding, but highlight the legacy of family-run business, and preserve that heritage and use that to inspire future generations. It gives a sense of identity to family businesses so that they can look back at not only their own history, but also that of those around them, Mahjoub stated. In short, it forges an otherwise-neglected narrative that lends significance in the context of businesses that have faced common struggles.
To this end, in the pilot stage of the program, researchers traveled around and interviewed family members from different generations, conducting in-depth case studies focusing on a specific business. Creating a sound methodology for oral interviews that was “rigid, neutral, and based on academic standards” took time, Mahjoub said. One of the questions that always came up in Mahjoub’s research was how to reconcile intergenerational discrepancies; “what to do when the grandfather says one thing and then his grandson says another,” and how to document that. “People can be very sensitive about the history of their own families,” stated the researcher.
El Agamy, on her end, emphasized the importance of avoiding assumptions, and being “agnostic” and neutral when it comes to research questions and outcomes, letting the story “unfold organically”. She added that in addition to accepting stories as they occur, it’s important to contextualize them by looking at what does the story mean for the time, for the context, the geopolitical realities, and the internal culture of the family.
In addition to interviews, primary and secondary sources were used to paint a clearer picture and fill in gaps in the history of a family business.
Some of the businesses chosen for the case studies were the Jashanmal Group, an Indian enterprise with an “impressive history” operating in the Gulf, and is currently based in Dubai; the Kuwaiti Al Majdoul Group, operating in the logistics sector; NCA-Rouiba, a “huge” and well-known name in Algeria, according to Mahjoub.
The FBH project also produces an article series, capturing different perspectives in order to escape being isolated in academic journals.
In addition, FBH conducts tours of archival material gathered at the NYUAD library. Various documents, family pictures, registration licenses, and other things are present for those interested to engage with history first-hand. Mahjoub described the “impressive” experience as “nice to look at” and “quite nostalgic”. She added that it is a “testimony to the mentality that is starting to form around this project, where families are starting to trust researchers more and share their family history.”
Among the challenges faced, according to Mahjoub, was a lack of documentation. She explained that family business history is a topic that is generally not documented, with all documents collected either being primary sources or found by digging deep in the archives. “Most topics have pre-existing literature and resources to draw from, this topic has little,” she said.
Another challenge Mahjoub mentioned is the diversity of documentation languages due to the region’s colonial past. Accordingly, the research team “has to be equipped for all the possibilities” and all cultural backgrounds to ensure access to all research sources.
Surprising Findings
When it comes to surprising findings, the one most striking to Mahjoub is family feuds, which “never cease to fascinate” and are often well-documented. Another interesting finding is the striking cross-industrial and cultural background similarities between certain families. The context of operations helps show these patterns, as Mahjoub stated that any family which has gone through colonization/decolonization, natural disasters, or difficult moments “pretty much behave in the same way”.
El Agamy expanded on this idea, saying that there are different types of entrepreneurships that are observed across generations, with the founders of family businesses having sharing “certain behavioral states that are very similar” for example, and the second generation having different shared patterns of behavior. These patterns in the next generations impact “future generations, longevity, success factors under duress.”
Governance and Succession
Longevity and success are what family businesses strive for, and they come, in large part, because of effective governance and succession planning.
Mahjoub emphasized the role of family bonds for success, saying that families that put the most effort towards maintaining strong ties between family members “very simply put are the ones very likely to continue and maintain successful succession planning.”
The researcher stated that they look at mainly three things when assessing success: the business itself and everything that goes into it including the evolution of the business entity since its foundation; the family itself, another key element that is “underestimated”; and contextual events that take place – even if they’re not dramatic or major- and how they impact operations, another factor that should not be underestimated.
El Agamy considered the difficulties of success. “It’s a very, very difficult thing to take a collective from A to B, whether it’s changing management in a corporation or making a family business more aligned,” she said. El Agamy identified the reason as to why governance and succession planning are so hard. “I always get a little upset when we say ‘oh, family businesses are bad at governance,’” she said, adding that governance is a complex question. Firstly, because it involves multidisciplinary activities, which need psychologists, lawyers, economists, and businesspeople. You need to be “so many things at the same time” to “manage complex processes”. This is besides that family business stories often involve personal experiences, psychological events and trauma that hinder the ability to work together, according to El Agamy. “It’s very difficult to work together when we’re traumatized,” El Agamy said, adding that we “underestimate the effect of trauma in our region,” and have to take it seriously.
When family business governance and succession planning are pulled off well, however, longevity and success are likely. El Agamy gives value to longevity by stating that it’s something “beyond work” and simple attachment to the workplace, and that when you’re part of a family business you tend to “stick around longer than usual”. However, El Agamy warns against longevity for its own sake, explaining that family members can’t force other family members to be there if they don’t want to, and that forcing people into a “mold which isn’t their own” is a recipe for failure. Instead, we should prioritize the “health of the family, health of the business, and impact on the community.”
Luckily, according to El Agamy, there is now more and more research on the “emotional wealth” of family enterprises, asking more questions about wellbeing and mental health. These questions are of a more complex nature when it comes to family businesses, according to El Agamy, as family business leaders are often faced with a sense of loneliness stemming from the heavy burden of responsibility that they feel they must carry alone. Research is starting to slowly take a more “holistic view”.
The Tharawat manager noted that a comforting result of this research is finding out that family businesses share the same struggles. “One of the participants once told me ‘you know what, it actually feels less lonely now because I know that we’re all struggling with the same questions,’” El Agamy said.
The plan here on out, according to Mahjoub, is to scale up the quantity of research output, covering a larger number of family businesses with collections documenting their journeys and complemented by community input from businesses, the wider community, researchers, and others. In other words, the plan is to shed a bigger light on family businesses, inspiring, showcasing legacies and heritage, and highlighting common struggles—making family businesses feel a little less lonely.
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If you own or are part of a family business, do you relate to these challenges? Powered by PwC Middle East, Business Forward’s campaign on family business wants to dig deeper into understanding the dynamics and success factors for family businesses in Egypt and create room for a back-and-forth discussion about their successes and hardships. Join our campaign #IMovedMyBusinessForward to get a chance to tell your story. Click here.
