Senior business man, a boss, discussing a project with his junior employee in a coffee shop
Family-owned businesses have long been the backbone of the Gulf region’s economy, representing a unique blend of tradition, wealth, and entrepreneurial spirit. These businesses have thrived by embracing time-honoured values while shaping the economic landscape through their unwavering commitment to legacy. However, as the Gulf enters an era of rapid modernisation and global interconnectedness, these family enterprises are undergoing a profound transformation. Competition and upward mobility of people make it imperative for the old guard to change or perish. As the region’s landscape evolves, these businesses are reinventing themselves to make the most of a world that no longer plays by the old diktats.
What exactly makes family-owned businesses such an integral part of an economy? Ernst & Young, one of the largest multinational professional services firms in the world, estimates that family-owned businesses generate over USD 8 trillion in revenues and account for over 65% of global employment, 60% of the GDP, and over 80% of employment.
Legacy businesses have the resources to bring about scalable economic influence. It is an interplay of experience, resources, contacts, and trust that creates an impact. In times of economic insecurity, these businesses keep the demand and supply chain moving, often deploying their cash reserves to tide over the storm. Through generations of leadership, these family-run businesses have not only fuelled national growth but have also cultivated strong cultural ties, reinforcing their importance in the ongoing development of the region.
Ernst & Young estimates that family-owned businesses generate over USD 8 trillion in revenues and account for over 65% of global employment, 60% of the GDP, and over 80% of employment
Many of these family-owned enterprises face the pressures of generational transitions and cultural gaps, finding it challenging to maintain continuity while adapting to modern realities. Business continuity is the biggest challenge with command structures that often get overburdened or redundant, leading to a gradual decline in business performance.
To stay competitive, these businesses must not only reinvent their strategies but also professionalise their operations, incorporating advanced technology and streamlined management practices.
To keep the legacy alive and ensure future leadership and growth, these giants understand how crucial it is to plan wealth and succession smoothly and have successfully navigated leadership transitions through a clear succession plan by appointing a judicial committee. Since legacy businesses have deep financial and social roots, a lack of planning or generational conflicts can lead to disruptions and the mismanagement of assets. Early mentorship, grooming, professional management practices, and legal aid help legacy businesses stand the test of time.
Innovation and modern corporate governance practices via professional CEOs, external advisors, and advisory boards are being brought in to enhance strategic decision-making, avoid intellectual rust, and navigate complex global markets.
Digital transformation is taking centre stage too, with legacy businesses phasing out outdated (Enterprise Resource Planning) ERP systems in favour of advanced SaaS solutions. Digital tools also find favour with the younger generation of legacy business inheritors who are more tech-savvy and prefer data-driven decision-making. Using analytics with their generational experience ensures long-term success and adaptability in a rapidly changing business environment.
Governments across the GCC too are playing a pivotal role in supporting the modernisation of family-owned businesses. The Saudi Vision 2030 and the Dubai Chamber’s Centre for Family Businesses are designed to provide resources, frameworks, and guidance to help these companies thrive in the modern economy. Family businesses are aligning with Environmental, Social, and Governance (ESG) standards, investing in green energy solutions and contributing to social impact projects. Young leaders from business families are being encouraged to participate in policy discussions and bring fresh ideas to the Gulf business ecosystem.
Legacy businesses are increasingly moving toward institutionalisation, seeking to professionalise their operations. This shift involves bringing in external expertise, adopting formal governance structures, and expanding leadership beyond the immediate family. Many are pursuing IPOs, mergers, and global expansions to diversify their portfolios. A notable example is Gulf Oil International, which was acquired by the Hinduja Group in 1984 and is now present in over 100 countries.
Family enterprises are beginning to warm up to the idea of embracing modernisation without sacrificing their traditions. It is no longer about serving old wine in a new bottle but rather expanding their product portfolio beyond what have been their traditional bastions.
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