Consulting / Issues in the Family Enterprise / Leadership / Management Science / Research in the Field

Innovation and Family Traditions: Are they contradictory in the Middle East?

The PractitionerIntroduction:

Dilemmas faced by family businesses often range from:

  • Confronting global diversity challenges while keeping the business in the family;
  • Innovating while keeping family traditions;
  • Changing, modernizing and coping with dynamic environments while keeping family values;
  • Following merit and competition perspectives while preserving family harmony.

In these situations families are forced to think wider, deeper and differently. Families in business have to be aware of not letting their culture and family priorities block their ability to grow. They have to be mindful of the complexities relevant to their businesses, families and environments. They have to innovate or they will be doomed to failure.

Historically, managers have equated innovation primarily with the development and marketing of new products and new technologies. But increasingly, innovation is seen as applying to the development of new service offerings, business models, pricing plans and routes to market, as well as new management practices. There is now a greater understanding that novel ideas can transform any part of the value chain, and those products and services represent just the tip of the innovation iceberg.

Further complexities:

Being in the Middle East poses an additional challenge for innovation in family businesses: can families of the Middle East innovate while keeping their family traditions as tight as ever? Can they adapt when their females still need a mentor and a guardian to operate?

Dealing with the gender issue in the Middle East is often taboo and thus a real challenge. While you find some families in the Middle East that have bypassed the “gender complex,” there are still large numbers of families who are challenged when it comes to dealing with their female members. Some ask if the consultant can work on a legal document that can exempt females from their inheritance rights, or just make sure that they receive their rights outside the family business. Because females have to obey their husbands in some countries of the Middle East, having the in-laws on board is not very appealing to some family businesses.

In the same family you can talk to a male who believes that the family business is wonderfully run and everything is well organized and everyone is taken into consideration  and then you can talk to the women in that business, who say they are suffering from the lack of communication, feelings of unfairness and the likelihood that problems will soon explode. Ask males about why females are not part of the business and the answer is always they are taking their equal rights outside the business, which only rarely occurs.

Further complicating the situation is that females in some countries of the Middle East must have a guardian or a mentor. When they get married, their guardian is their husband. They are rarely looked at as entrepreneurs who can come up with innovative business ideas and move the business forward. They are often looked at as a burden to the business.

The question arises again as to whether these businesses are willing to step ahead, unite their family members, and move forward  or do they just want to use traditions as an excuse to maintain the status quo?

Traditions:

Traditions in a family business should revolve around the value system that the family follows. Integrating the family values with the business values should bring the family together. That’s how you can build harmony in a family business. The family values of the Middle East derive primarily from the Moslem religion, which can be a fair way of organizing and structuring the family if applied properly  even if it is not similar to the models that we see in the West, e.g., inheritance laws, family structure and the raising of the children.

Moslem inheritance laws follow Shari’a laws which basically give two shares to the male relative to one share for females, provided the male will take care financially of his sister in case of a divorce, knowing that in the Middle East, the male is in charge of the finances of the family.

Sticking to family traditions and keeping power in the hands of the males in the family is sometimes a way to keep the control and the family wealth in the men’s hands. This adds to the complexity of family-run and family-managed businesses.

Other major complexities in family businesses stem from the fact that families in business sometimes have the intention to hide information from other family members, mainly from females, and hence the tension mounts and solutions to challenges become almost impossible and the competitive advantage in the businesses is lost. Unfortunately one tension usually leads to another.

Women of the Middle East often find themselves lost in these traditions. Should they accept the unfair treatment of their families and keep disguised family harmony? Or ask for their rights in their family businesses? Some women file lawsuits since women are increasingly recognized for their potential and are consequently ready to fight for their rights.

Their actions acknowledge the changing role of women of the Middle East. Women are entering the workplace and have shown a proven capability for management and leadership. Hence, we see a growing body of female entrepreneurs starting and successfully managing their own businesses.

Minimizing complexities:

To minimize those complexities, there is a growing body of work on important practices in family business management. These include:

  • Common vision: Building a clear and common vision in the family business is a starting point in resolving complexities and aligning constituencies across genders.
  • Shared understanding: Including women and understanding their feelings and points of view helps in creating a shared understanding. Sustainability is a collective endeavor built on a shared sense of what the company is and is not becoming.
  • Alignment: Alignment of family and business goals is important, and aligning constituencies will help lead the process and create a diverse group of family business members. Including the female family members should not be an obstacle but a step towards better alignment and better family harmony.
  • Education and Tools: To achieve alignment and family harmony, there is nothing better than educating family members, but at the root is the family spirit that preaches fairness, separation of roles, and the nurturing of family members to become future successful leaders.
  • Diversity: Friction will eventually exist in a family business, but the way to manage it should also be present. Conflict resolution methods should always be available to resolve any eventual conflict that may appear.
  • Interaction: Family businesses need to establish forums, platforms and events to help family members and employees build networks and provide opportunities for exchange and serendipity to happen.

Conclusion:

Innovation and family traditions do not have to be in conflict with each other. With opens minds at the heart of the family business, the complexities of gender, conflict, hidden agendas and negative feelings become quite limited as there is cornerstone engraved on healthy ground.

About the contributor:

Josiane Fahed-SreihJosiane Fahed-Sreih is an associate professor of management and director of the Institute of Family and Entrepreneurial Business at Lebanese American University. She holds Certificates in Family Business and Family Wealth Advising. Josiane can be reached at jsreih@lau.edu.lb.

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