The Importance and Challenges of Family Businesses

Abstract

#This research study and summarizes the concept of family businesses, as well as the advantages and challenges they face. The study's objective can be concluded as follows: Family businesses are a vital artery in national economies. They are the foundation for the emergence and development of global economies. Therefore, their survival and growth are crucial for the country's economy. Family businesses contribute to approximately 79% of the global economic output and represent around 95% of registered companies worldwide. Family businesses provide a broad platform for investing the savings of wealthy families in societies. They create extensive employment opportunities, accounting for more than 50% of jobs in some countries. Consequently, they contribute to the prosperity of communities by offering goods and services. Family businesses hold a leading position in publicly traded capital markets, particularly in Europe and America. However, family businesses face several challenges, including: 1. Disadvantages arising from the integration of ownership and management, which can significantly impact managerial decisions influenced by personal considerations. Excessive centralization can lead to stagnation and failure. 2. Absence of long-term strategic planning in most of these companies, along with the lack of effective administrative and legal systems in defining their goals, implementing their operations, and performing efficient oversight. 3. Financial weakness of many companies due to limited sources of funding and the absence of an effective system for general and financial supervision. 4. Inability of many companies, especially Arab ones, to develop their current products with their own capabilities. Additionally, they struggle to benefit from global technological advancements due to a lack of financial and technical resources to adapt these technologies to their capacities and existing products. This may be due to a lack of export-oriented vision and excessive reliance on meeting the needs of the local market