Family firms in Bahrain are expected to be the driving force behind the country's economy in the wake of the recent oil price slump, a report said.

A research report by Oxford Strategic Consulting (OSC) has found that family firms outperform non-family firms by an average of 15 per cent and represent approximately 75 per cent of the private sector economy across the whole of the GCC, reported the Gulf Daily News, our sister publication.

OSC chairman and Oxford University fellow professor William Scott-Jackson said that building better human resources departments "would yield an extra $14 billion in GCC-listed company profits per year".

"We believe that the recent drop in the price of oil and consequent debates over spending in the GCC will refocus attention on family firms," he said.

"This is mainly because family firms have proven themselves to be incredibly successful organisational models - not only in the GCC, but globally.

"The unique strengths of Bahraini family firms hold important insights for economic forecasters, policy planners and business leaders looking for growth.

"Family firms represent around 75 per cent of the private sector economy in the GCC, so their continued success is a vital contributor to overall GCC growth.

"Bahraini family firms possess particular advantages that give them a unique competitive edge.

"First, 50 per cent of GCC family-owned firms are involved in more than five sectors, which means that they spread risk, are more resilient to downturns in one sector, and can rapidly move into growth markets - although they can be spread too thinly."

Family companies in Bahrain also benefit from something Scott-Jackson terms "the Bahraini Leadership Style".

"This leadership style focuses on relationships and loyalty, which positively impacts employee engagement, productivity and retention," he said.

Integrated

"The most successful family firms are also unusually integrated with the government and consequently more aligned with their country's objectives.

"Much of their economic success is related to providing stability and a strong cohesive link between national and private sector strategies and objectives."

However, the professor said that not all Bahraini family firms follow strategies "as they appear in traditional business textbooks".

"A family's business strategy may, for example, be more concerned with preserving the family name rather than generating profits," he said.

"It is precisely the unique qualities of these family firms that enable these companies to continue to defy expectations and serve as key drivers of regional growth."

Scott-Jackson said that while the recent 50 per cent cut in oil prices could lead to non-critical investment being slashed, it was important to invest in human resources.

"Depending on your viewpoint, some people might see investing in people and skills as non-critical," he said.

"Yet our research shows that investing in national talent, a more sustainable resource than oil and gas, can achieve huge returns for relatively low costs and can create a stable economic future for the GCC."

The three high-impact steps he suggests are investing in human resources departments, encouraging entrepreneurs who contribute to job growth and embracing family firms.

"Many GCC countries promote entrepreneurship and the development of small and medium enterprises development as part of their diversification strategies, but more can be done to identify which entrepreneurs are most likely to succeed," said Scott-Jackson.

"Our research found, for example, that only 6 per cent of entrepreneurs actually contribute to employment growth. This means that targeted support to high-potential entrepreneurs, known as 'gazelles', would be more cost-effective than across the board funding of entrepreneurial projects." – TradeArabia News Service