As the global economy grows more complex each day, the availability of high-quality information is essential to the productive conduct of business – especially in regions that face as many challenges as the Arab world does. Despite this fact, we find that the region produces little academic research for its businesses to use and innovate on. In order to understand the call for greater support and strategic development of research originating in the Middle East, one has to understand the relationship between academia and the business world and the importance of enriching the undeniable business skills in the region with sound research.
Academia and Business – A necessary partnership?
Hardly any entrepreneur, manager or executive is not in some way or another, confronted with the conduct or the results of business research: Results of business research have become daily companions of business leaders. As opposed to a couple of decades ago, nowadays, most academics do not only limit their activities to observing businesses and scribbling down figures and charts in their notebooks. Rather on the contrary: through their findings they are often heavily involved in actual business decision-making processes and can provide valuable consulting services. But also the businesses themselves are establishing their own role in that evolving relationship and many have started communicating with the academic world and formulating their needs. This even goes as far as companies sponsoring specific institutes or research programs for the areas of research they are interested in – be it as part of their CSR activity or as a business investment.
It is an unfortunate truth that often the gap between what is taught and what is encountered in the working world is rather considerable and in that light some might justly ask why one should invest in research endeavours at all. However, in these situations we tend to forget that interdependence between academia and business is a rather young phenomenon. In order to fully understand the nature and impact of this relationship and why the quality of interactions between the academic and the business world differs greatly from one region to another, we need to understand the historical background of business research.
The history of family business research
Historically, research into family businesses has to be seen as a part of the research into the wider field of “entrepreneurship“. Overall, research in this area is fairly recent and was initially mainly conducted for teaching purposes. First attempts to approach family businesses in a more analytical way were greatly dominated by writings of financial advisors, business consultants or even family therapists. Through their work with families and/or their businesses, these professionals were able to observe the family and follow how they were dealing with their professional endeavours. These early contributions were mainly prescriptive in character, however showed a lack of valid and relevant research.
Over the course of the last 30 years however, the significance of entrepreneurship and family business research has been increasingly recognized. In response to that development, more sophisticated and adapted research methodologies were developed. Today, specialized research institutes that research and teach family business subjects can be found worldwide. Other than purely academic research, we can also observe that several consulting firms and banks lead small research projects and publish statistical information on family businesses. Fairly often, family business research is conducted through cooperation between family businesses, academic institutions and service providers.
Now that we understand where family business research has its roots, it becomes clear that it has always been directly linked with the day-to-day conduct of business. But what is it, really, that researchers research when they come to our companies and observe our day-to-day business?
What is (family) business research?
Broadly defined, research is the systematic and objective gathering of information relating to a specific question. The purposes of research are very varied and in the many different sciences we know it is used to analyze, predict, improve and explain certain phenomena or situations – bluntly put: understand how and why things happen.
Due to the complex structure that is the “firm” or “company“, business research is not “one science”. Rather, it is the result of the work of researchers from various fields trying to get closer to the business conducting entities and to the factors that explain business success and failure. Family Business research can be said to be even more varied than “ordinary” business research: In the family business we will always have to deal with the complexity of linking the family entity with the business entity – a fact that renders research in that field even more interesting.
We all of us have been confronted with the variety of means that researchers have at their disposal to publish the results of their work. We know of rather specific and qualitative presentations such as case studies. When speaking of quantitative research, statistics are highly relevant, as they are the mathematical science to collect, analyse, interpret, explain, and present data in business.
Researching family businesses issues can however also encounter obstacles, such as a lack of secondary data, the difficulty of conducting field studies due to the secrecy of family businesses, and the problem of discontinuity of the business in long-term studies, the wide spectrum of forms of enterprises and the lack of commonly accepted definitions to depart from.
Acknowledging this patchwork of methodologies and publishing methods, as well as knowing of the different possible obstacles, clearly shows the need for research to be conducted by academics with a great insight into the day-to-day conduct of business. The remaining question now is how businesses can benefit from research.
Why do we need family business research?
There are a couple of arguments that support the strive for more family business research: Family businesses are known to often feel the urge to learn from the experiences of their peers. They do not only want to draw from the knowledge within the family, but they want to learn from other family businesses. Here research methods like comparative studies between family businesses or between family-run companies and non-family companies can be highly interesting. We also find that case studies can bring invaluable input to further family business strategies.
Of course, like their non-family counterparts, family businesses will need market information and statistics when considering expansions of their activities, acquisitions or when entering a new geographical area.
Another element is the importance of the opinion of the general public and policy makers in relation to family businesses. In order to fully understand the importance of family businesses and the details of the impact they have on national economies (contribution to the GDP and impact on employment) there is a great need of economic data on a large scale. Furthermore, policy makers need to have information that lays out the challenges family businesses are facing and how to address them.
Thus, it is apparent that access to high quality, regional research will be crucial for the further development of family businesses, for the evaluation of investment opportunities and for the improvement of the situation for family firms on the policy making level. Decision-making processes, the development of inter-generational strategic planning, but also broader research questions such as marketing development research can be crucial for the development and success of a family business.
The situation in the Arab world
The “Arab world”, understood as a loose conglomerate around 22 countries, counting a population of over 320 million, sources its interconnectivity from speaking the same language and from a closely connected religious and cultural background.
Looking through the lenses of a more Western approach to academic research, one may well argue that there has been a certain lack of structured academic business research in the Arab world. However, one cannot put this argument without acknowledging certain characteristics in the region’s conduct of business that may well have compensated missing academic research: The success stories that pour out of the MENA region are due to the great business instincts, internal expertise and decision-making skills that family‘s have acquired in their businesses. There is a great wealth of knowledge and wisdom, passed on from generation to generation, from which Arabs have been benefiting for centuries, and which, combined with a great insight and knowledge about their own region, has shaped highly successful businessmen and – women and some notable business empires.
However, as companies want to expand their activities globally, as the influence of technology shapes our time and the pace becomes faster and faster, Arab businesses understand the need they have for the benefits of high quality research and knowledge – especially from within their own region.
Yet, with the exception of individual Middle Eastern academic institutions, research on family businesses in the Arab world is mainly conducted by large consulting firms or foreign universities and business schools.
One rather problematic aspect of this development is that research is only a side-occupation in the case of non-academic institutions. It is neither the task nor the intention of corporations to replace in-depth academic research. A further challenge is the cross-cultural comprehension: academics from abroad might encounter difficulties in understanding how certain aspects of Arab culture influence business behaviour. They might need time to understand the complex workings of the different parts of the region and their impact on businesses.
We can also observe that Arab research is too often focused on major family businesses even though the bulk of family businesses can be found amid the region’s varied landscape of small and medium enterprises (SME’s). Often international organizations try to focus on SME’s for the purposes of economic development in poorer parts of the region. While this is a very useful tool, the information available has not found its way to the Arab business world and is possibly better known amongst international development agencies than in the home market.
Expanding Arab research
For a region with economic potential that can still be leveraged on to a great extent, it is essential that the Arab world has researchers that provide the professional, qualitative research and statistical information needed to do so. While clearly research does demand a great amount of long-term commitment, it is intelligent businessmen- and women alongside insightful researchers who can further uncover the region’s potential. It is guaranteed that a little investment today will be well worth the effort tomorrow.
Tharawat Magazine, Issue 4, 2009