70pc of global GDP comes from family businesses in Bahrain
Family Business is a term that usually brings the notions of mom-and-pop stores, who follow unprofessional, backward- looking strategies. But, it may be a surprise to know that 70 per cent of global GDP is contributed by family businesses and this category includes transnational companies.
The not-so-professional image of family businesses were created by the business schools, especially in US and through the pretences of Wall Street, according to an international expert on Family Business Randel S. Carlock, Berghmans Lhoist Chaired Professor in Entrepreneurial Leadership at INSEAD, France.
He is among the first few who recognised the importance of family businesses as a research subject and has written multiple books, after interviewing thousands of family businesses across the world. He also advises several global family businesses. Speaking to DT News on the sidelines of the recent KPMG Family Business Conference, Professor Randel said that unlike other business, family businesses were difficult to research as each family was distinct and didn’t fit into database-oriented models.
He added that another reason for the less favourable image is the sensationalism by the media, who are more than interested to portray the drama that happens in business families across the world. Referring to Shakespeare’s King Lear, he added that the humans are driven by emotions, humanity trounces logic or reason, no matter the extent of
training or coaching received. But, family businesses, surprisingly outperformed publicly traded companies, according to a decade-long study published in the Journal ofFinance, he added.
“This is because family businesses have more factors like emotional capital, social capital and spiritual capital to drive its growth along with the financial capital. But, for the listed capital, in most cases, only financial capital is the driving force,” he noted.
Great business families manage their emotions and reason and create long-term value.
The INSEAD professor added that families who run businesses, from all parts of the world, agrees that it is not business that causes problems but family. Complaints about fairness, rivalry, disappointment and all emotional aspects drive the frictions, irrespective of continents. Planning and communication are the only tools available for any business or relationship to survive the test of ages, he said.
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