Determinants Linked to Family Business Sustainability in the UAE: An AHP Approach
Abstract
:1. Introduction
Research Landscape
- (1)
- To identify the factors that influence the viability of a family business; and
- (2)
- To prioritize the importance of factors such as succession planning, strategic planning, corporate governance, leadership, family business values, family capital and role of advisors in two different cases considering large and medium family businesses in the UAE.
2. Literature Review
2.1. Family Business Definitions
2.2. Family Business Developmental Stages
2.3. Family Business and Sustainability
2.4. Success Factors in Family Business Sustainability
2.4.1. Succession Planning
2.4.2. Strategic Planning
2.4.3. Corporate Governance
2.4.4. Leadership
2.4.5. Family Business Values
2.4.6. Family Capital
2.4.7. Family Firm Advisors
3. Methodology
3.1. Research Technique
3.2. Data Collection and Interview Procedure
- To ensure that the respondent is the right person filling the AHP preference scale.
- For the interviewer to understand how the business is running and how it is led.
- For the interviewer to evaluate the family members’ business knowledge and their preparation for future generations.
3.3. Results
3.3.1. Pairwise Comparison for Main-Criteria
3.3.2. Pairwise Comparison for Sub-Criteria
3.4. Computing Alternatives Global Weights
4. Discussion
5. Conclusions
5.1. Theoretical Implications
5.2. Practical Implications
5.3. Limitations
Acknowledgments
Author Contributions
Conflicts of Interest
References
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Enterprise Category | Number of Employees |
---|---|
Micro | <5 |
Small | 5–19 |
Medium | 20–49 |
Large | ≥50 |
Phase | Older Generation | Younger Generation | Approximate Business Age | Generation Leading |
---|---|---|---|---|
Young Family Business | >40 years old | If present <18 years old | <15 years | First Generation |
Independence of younger generation entering the family business | 33 to 55 years old | 13 to 29 years old | <30 years | First Generation |
Working Together | 50 to 65 years | 20 to 45 years | <45 years | First and Second Generation leading |
Passing the baton | Older than 60 years old | >45 years | Second Generation leading |
Criteria | Sub-Criteria | Reference | |
---|---|---|---|
1 | Succession Planning | Founder Initiative Successor Ability/Desire | Christensen (1953), Trow (1961), Ward (1987), Delmas and Gergaud (2014), Writer (2017), Sharma et al. (2003a), Sharma et al. (2003b) |
2 | Strategic Planning | Family Commitment on Continuity Family Issues and Goals | Astrachan and Kolenko (1994), Blumentritt (2006), Carlock and Ward (2001), Ward (1988), Price Waterhouse Coopers (PWC) (2016), Ward (1988) |
3 | Corporate Governance | Decision Making Structure Planning/Problem Solving Structure | Lansberg (1999), Mustakallio, Autio, and Zahra (2002), Pieper (2003), Aronoff (2004), Carlock and Ward (2001) |
4 | Leadership | Competent Family Member Leadership Effective Leadership Skills | Fiedler (1996), Gersick et al. (1997), Hartel, Bozer, and Levin (2009), Van der Westhuizen and Garnett (2014), Le Breton-Miller, Miller, and Steier (2004), Lansberg (1988) |
5 | Family Business Values | Family Norms Business Norms | Aronoff and Ward (2000), Erdem and Baser (2010), Tapies and Moya (2012), Lansberg (1983), Koiranen (2002) |
6 | Family Capital | Human Capital Social Capital | Danes, Lee, Stafford, and Heck, (2008), Danes, Stafford, Haynes, and Amarapurkar (2009), Stafford et al. (2010), Sirmon and Hitt (2003), Danes et al. (2009) |
7 | Family Firm Advisors | Formal Advisors Informal Advisors Family Firm Board Advisors | LaChapelle and Barnes (1998), Kaye and Hamilton (2004), Astrachan and McMillan (2006), Strike (2012) |
Intensity of Importance | Definition | Explanation |
---|---|---|
1 | Equal importance | Two criteria contribute equally to the objective |
3 | Moderate importance | Judgement slightly favours one over another |
5 | Strong importance | Judgement strongly favours one over another |
6 | Very strong importance | A criterion is strongly favoured and its dominance is demonstrated in practice |
9 | Absolute importance | Importance of one over another affirmed on the highest possible order |
2,4,6,8 | Intermediate values | Used to represent compromise between the priorities listed above |
Order of the Matrix | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | |
RI Value | 0 | 0 | 0.58 | 0.90 | 1.12 | 1.24 | 1.32 | 1.41 | 1.45 | 1.49 | 1.51 | 1.48 | 1.56 | 1.57 | 1.59 |
L1 | L2 | L3 | L4 | L5 | L6 | |
---|---|---|---|---|---|---|
Industry | Diversified (e.g., Retail, Real Estate, Construction, Oil Field Services, etc.) | Diversified (e.g., Automotive, Oil and Gas, Contracting, Commercial, Marine Engineering, etc.) | Construction | Retail of large Swiss Watches Brand | Manufacturing (Ready Mix Concrete) | Diversified (e.g., Hospitality, Real Estate, Automotive, Travel, and Future Projects) |
Year established | 1977 | 1979 | 1970 | 1950 | 1972 | 1962 |
Ownership | 100% | 100% | 100% | 100% | 100% | 100% |
Managing generation | First/Second | Second | First/Second | Second/Third | First/Second | Family Supervisory board First and Second |
No. of Family members In the business | 7 | 8 | 3 | 9 | 3 | 9 |
Interviewee | Son (Chief Executive Officer) | Son (Managing Director) | Daughter (Projects Director) | Son (Chairman) | Father (Chairman) | Second (Supervisory Board Member) |
Strategic Decision | Father (Chairman) | Family council, board of directors | Father (Chairman) | Family council, board of directors | Father (Chairman) | Family Supervisory board |
M1 | M2 | M3 | M4 | M5 | M6 | |
---|---|---|---|---|---|---|
Industry | Construction | Manufacturing (Aluminium and Carpentry) | Consultancy | Piling (Construction) | Construction | Dental |
Year established | 1994 | 1996 | 1981 | 1989 | 1998 | 2000 |
Ownership | 100% | 100% | 100% | 100% | 100% | 100% |
Manging generation | First/Second | First/Second | First/Second | First | First | First (Two founder brothers) |
No. of family members in the business | 3 | 2 | 2 | 2 | 2 | 2 |
Interviewee | Father (Chairman) | Son (General Manager) | Daughter (Design Manager) | Father (Managing Director) | Father (Chairman) | One founder brother (Head Orthodontist) |
Strategic Decision | Father (Chairman) | Father (Chairman) | Father (Chairman) | Father (Managing Director) | Father (Chairman) | Two founder brothers (Head Orthodontist and Head of dental surgery) |
Medium Family Business—Pairwise Comparison | ||||||||
---|---|---|---|---|---|---|---|---|
SP | STP | CG | LED | FV | FC | FA | W (Priority) | |
SP | 1.00 | 3.67 | 3.67 | 0.15 | 0.23 | 0.20 | 4.33 | 0.105 |
STP | 0.27 | 1.00 | 3.33 | 0.17 | 0.25 | 0.20 | 5.00 | 0.077 |
CG | 0.27 | 0.30 | 1.00 | 0.17 | 0.22 | 0.22 | 2.67 | 0.045 |
LED | 6.61 | 5.94 | 5.76 | 1.00 | 2.33 | 3.00 | 6.67 | 0.368 |
FV | 4.26 | 0.30 | 4.54 | 0.43 | 1.00 | 1.89 | 5.33 | 0.185 |
FC | 5.05 | 3.97 | 4.54 | 0.33 | 0.53 | 1.00 | 6.33 | 0.192 |
FA | 0.23 | 0.20 | 0.38 | 0.15 | 0.19 | 0.16 | 1.00 | 0.029 |
Sum | 17.69 | 15.38 | 23.22 | 2.41 | 4.76 | 6.66 | 31.33 | 1.000 |
CR | ||||||||
0.09 |
Large Family Business—Pairwise Comparison | ||||||||
---|---|---|---|---|---|---|---|---|
SP | STP | CG | LED | FV | FC | FA | W (Priority) | |
SP | 1.00 | 0.98 | 0.72 | 3.67 | 5.33 | 4.56 | 5.00 | 0.230 |
STP | 1.02 | 1.00 | 2.78 | 3.67 | 5.67 | 4.33 | 4.67 | 0.284 |
CG | 1.38 | 0.36 | 1.00 | 4.67 | 6.00 | 3.89 | 3.67 | 0.223 |
LED | 0.27 | 0.27 | 0.21 | 1.00 | 4.33 | 4.00 | 3.67 | 0.116 |
FV | 0.19 | 0.36 | 0.17 | 0.23 | 1.00 | 0.49 | 0.31 | 0.039 |
FC | 0.22 | 0.18 | 0.26 | 0.25 | 2.05 | 1.00 | 0.85 | 0.049 |
FA | 0.20 | 0.21 | 0.27 | 0.27 | 3.20 | 1.17 | 1.00 | 0.058 |
Sum | 4.28 | 3.36 | 5.41 | 13.75 | 27.59 | 19.44 | 19.16 | 1.000 |
CR | ||||||||
0.093 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Founder Initiative | Successor Ability/Desire | W (Priority) | Founder Initiative | Successor Ability/Desire | W (Priority) | |
Founder Initiative | 1.0 | 2.72 | 0.731 | 1.0 | 5.22 | 0.839 |
Successor Ability/Desire | 0.37 | 1.0 | 0.269 | 0.19 | 1.0 | 0.161 |
Sum | 1.37 | 3.72 | 1.0 | 1.19 | 6.22 | 1.0 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Family Commitment on Continuity | Family Issues and Goals | W (Priority) | Family Commitment on Continuity | Family Issues and Goals | W (Priority) | |
Family Commitment on Continuity | 1.0 | 6.0 | 0.857 | 1.0 | 5.53 | 0.847 |
Family Issues and Goals | 0.17 | 1.0 | 0.143 | 0.18 | 1.0 | 0.153 |
Sum | 1.17 | 7.0 | 1.0 | 1.18 | 6.53 | 1.0 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Decision Making Structure | Planning/Problem Solving Structure | W (Priority) | Decision Making Structure | Planning/Problem Solving Structure | W (Priority) | |
Decision Making Structure | 1.0 | 3.2 | 0.762 | 1.0 | 1.76 | 0.637 |
Planning/Problem Solving Structure | 0.31 | 1.0 | 0.238 | 0.57 | 1.0 | 0.363 |
Sum | 1.31 | 4.2 | 1.0 | 1.57 | 2.76 | 1.0 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Competent Family Member Leadership | Effective Leadership Skills | W (Priority) | Competent Family Member Leadership | Effective Leadership Skills | W (Priority) | |
Competent Family Member Leadership | 1.0 | 0.96 | 0.489 | 1.0 | 2.75 | 0.733 |
Effective Leadership Skills | 1.05 | 1.0 | 0.511 | 0.36 | 1.0 | 0.267 |
Sum | 2.05 | 1.96 | 1.0 | 1.36 | 3.75 | 1.0 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Family Norms | Business Norms | W (Priority) | Family Norms | Business Norms | W (Priority) | |
Family Norms | 1.0 | 4.56 | 0.774 | 1.0 | 0.95 | 0.486 |
Business Norms | 0.22 | 1.0 | 0.180 | 1.06 | 1.0 | 0.514 |
Sum | 1.22 | 5.56 | 1.0 | 2.06 | 1.95 | 1.0 |
Large Family Business | Medium Family Business | |||||
---|---|---|---|---|---|---|
Human Capital | Social Capital | W (Priority) | Human Capital | Social Capital | W (Priority) | |
Human Capital | 1.0 | 2.7 | 0.731 | 1.0 | 2.2 | 0.688 |
Social Capital | 0.37 | 1.0 | 0.269 | 0.45 | 1.0 | 0.313 |
Sum | 1.37 | 3.72 | 1.0 | 1.45 | 3.2 | 1.0 |
Large Family Business | Medium Family Business | |||||||
---|---|---|---|---|---|---|---|---|
Formal Advisors | Informal Advisors | Family Board Advisors | W (Priority) | Formal Advisors | Informal Advisors | Family Board Advisors | W (Priority) | |
Formal Advisors | 1.0 | 4.22 | 3.67 | 0.648 | 1.0 | 5.53 | 6.33 | 0.743 |
Informal Advisors | 0.24 | 1.0 | 2.44 | 0.227 | 0.18 | 1.0 | 1.15 | 0.134 |
Family Board Advisors | 0.24 | 0.41 | 1.0 | 0.125 | 0.18 | 0.87 | 1.0 | 0.123 |
Sum | 1.47 | 5.63 | 7.11 | 1.0 | 1.36 | 7.41 | 1.0 | 1.0 |
CR | CR = 0.05 < 0.1 | CR = 0.04 < 0.1 |
© 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
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Oudah, M.; Jabeen, F.; Dixon, C. Determinants Linked to Family Business Sustainability in the UAE: An AHP Approach. Sustainability 2018, 10, 246. https://doi.org/10.3390/su10010246
Oudah M, Jabeen F, Dixon C. Determinants Linked to Family Business Sustainability in the UAE: An AHP Approach. Sustainability. 2018; 10(1):246. https://doi.org/10.3390/su10010246
Chicago/Turabian StyleOudah, Mohammed, Fauzia Jabeen, and Christopher Dixon. 2018. "Determinants Linked to Family Business Sustainability in the UAE: An AHP Approach" Sustainability 10, no. 1: 246. https://doi.org/10.3390/su10010246
APA StyleOudah, M., Jabeen, F., & Dixon, C. (2018). Determinants Linked to Family Business Sustainability in the UAE: An AHP Approach. Sustainability, 10(1), 246. https://doi.org/10.3390/su10010246