Family-owned businesses are uniquely placed to shape the fourth industrial revolution to ensure it is empowering and human-centred, rather than divisive and dehumanising, said a senior official on Monday.
These remarks were made by Badr Jafar, Chief Executive of Crescent Enterprises and Managing Director of Crescent Group, who told delegates at a public session titled, ‘The Family Business Case’ at the World Economic Forum in Davos, Switzerland.
Other panellists included Andre Hoffmann, Vice Chairman of pharmaceuticals giant Roche, and Lubna Olayan, Chief Executive Officer of Olayan Financing Company.
Jafar stated in an opening address that “Family businesses are the epitome of human commerce, and tend to be deeply connected to our employees, stakeholders and communities.”
“Our stakeholders know us and the values that we represent. Therefore the key to being successful and sustainable in the era of this technological revolution will be to leverage these natural advantages while being realistic about the things we need to change about ourselves,” he added.
According to the Family 500 Index, the world’s 500 largest family businesses produce $6.5 trillion per year in sales and employ over 21 million people, enough to make them the third largest economy in the world behind the US and China.
In the Middle East and North Africa region, 85 per cent of non-oil GDP is generated by family businesses that are set to hand down assets totalling more than $1 trillion to the next generation within the next ten years.
The discussion outlined that, unlike many firms whose financial impact is constantly being evaluated on a quarterly basis, family businesses are generally more capable of pursuing a long-term, value-driven strategy that results in these businesses enjoying higher levels of trust and loyalty than other types of firms.
According to the Edelman Trust Barometer, family-owned firms are significantly more trusted than public companies, state-owned businesses or even NGOs.
“We can choose to either take this trust for granted, or use it to help us work with all our stakeholders to shape this revolution in a manner that improves the state of the world, which will also in turn enhance this trust even further,” Jafar said.
However the sustainability of many family businesses worldwide, including in the Middle East, is plagued by a myriad of challenges related to poor governance codes, often leading to failed succession and depletion of wealth and assets.
Family businesses are increasingly embracing the business case behind good governance, according to a recent research report released by Pearl Initiative, the leading non-profit organisation promoting a culture of corporate transparency and accountability, 89 percent of 350 firms surveyed across Gulf Region believed that improved corporate governance standards are essential to the survival and growth of business in the region.
The panel session also addressed how family businesses can take the lead in investing in socially-centred business models that seek to address the numerous challenges faced across the Middle East, including environmental, job creation, and humanitarian. Jafar presented an example of Crescent
Enterprises launching CE-Ventures, the business’ corporate venture capital platform, which is on target of investing $150 million in social innovation by 2020 across a diverse range of sectors including education and healthcare; and CE-Creates, an internal incubation platform, which has been fostering innovation by incubating and growing businesses with a measurable social and environmental impact, including electric mobility solutions being rolled out across the region and a global line of industrial workwear for hot climates.
The World Economic Forum was held in Davos from January 22-25, with over 3,000 senior political, business, and cultural leaders from around the globe in attendance, including over 60 heads of state.
About Crescent Enterprises
Crescent Enterprises is a diversified conglomerate headquartered in the UAE that operates a range of regional and global businesses across four platforms: CE-Operates, CE-Invests, CE-Creates and CE-Ventures.
CE-Operates, the operating business platform, constitutes subsidiaries and affiliates that span the ports and logistics, power and engineering, and business aviation sectors.
These include Gulftainer, Momentum Logistics, Uruk Engineering and Contracting and Gama Aviation. CE-Invests, the strategic investments platform, maintains a balanced portfolio of diversified asset class investments, including private equity, real estate and other structured assets.
CE-Ventures is its corporate venture capital platform that makes strategic direct investments in early- to later-stage start-ups across the world. Meanwhile, CE-Creates, the business incubation platform, develops early-stage concepts into economically viable and scalable businesses with a significant social impact.
Crescent Enterprises employs over 4,500 people in 20 countries across five continents and has a long-term investment and operating philosophy that embraces corporate governance, inclusive growth and responsible business practices.
The company is a subsidiary of the Crescent Group, one of the most progressive family business groups that has been actively contributing to shaping the economic landscape of the Middle East and North Africa (MENA) region for more than 45 years.
Crescent Group’s other subsidiary, Crescent Petroleum, is the first and largest privately owned indigenous upstream oil and gas company in the Middle East.