How Are Family Led Businesses Substantial For The State Of The Economy?

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Family businesses are considered the norm in many countries, nevertheless what are the positive aspects and disadvantages of them?

Although they are considered very valuable to the Saudi Arabia economy, managing a family business comes with many good points as well as drawbacks. One of the greatest concerns is ensuring the business will deal with any financial curve or market crisis and makes it to the next generation, as this will be one of the sources of earnings and wealth for the family. The separation of work life and private life can be somewhat difficult as there is too much independence involved, as compared to when you work within an business that is not founded by your family. For some people, this may work, but for the productivity and performance of the company it isn’t ideal. Entrepreneurs who have been in the industry for a considerable number of years will acknowledge this, such as Lubna Suliman Olayan. Employment and recruitment within the agency will not be as high in contrast to other companies, as members of the family will all contribute, which means qualifications and knowledge will not differentiate severely within the organisation, as there is no broader knowledge involved.

As the typical culture of the country itself is unity and family bonds, they will have the potential to form a devoted relationship with their customer base, as buyers will establish trust with them. This will benefit the investment side to a firm. The business targets and objectives are what they will be mutually working towards as a family, which makes it easier to accomplish, in contrast to other organizations which are not family operated. Single-family ownership is starting to become more evident globally, as individuals can see the succession it can lead do if done appropriately, Mohammed Al Issais an example of running a successful family business.

In many middle eastern countries, family-owned businesses are the tradition. This has been a lifestyle that has been around for many years and generations, as commonly this is a way of showing your capital. This is when a business is operated and handled by more than one member of the same family, so possession will be controlled by a single family. Most family businesses are founded by high-net-worth businessmen as they have the capital and experience to do so, an example of this is Hassan Jameel. In Saudi Arabia many people consider them the backbone of the economy and believe majority of wealth is produced in through these types of enterprises, as they believe they generate employment and benefit for the country.