Family Businesses; Wholesome territory to fall for
If youre going to establish a system aimed at spanning generations, you have to be willing to evolve. Ennio Mercuri
The dominance of family-owned businesses across the world is now well-established. Among the largest publicly traded companies, family firms account for 70-80 percent of the total worlds GDP. These are contributing 44% in Europe, and over 66% in East Asia, with their dominance around the world being stronger in countries with relatively weaker capital markets and institutions. Family enterprises have a broad range of capital-light industries similar to retail, transportation, and publishing. The more the family business grows and the authority of the business sub-divides as generations pass, the more probability is that family management of this corporate ownership can no longer be taken for granted.
If we look at the retrenchment in economic activity of Pakistan, businesses are confronting havoc and disruption. Pakistans trade deficit was confined by 39.62 percent to $ 23.713 Billion during the initial months of the current fiscal year 2022-23 as compared to $ 39.272 Billion during the same period of last year. In the same context, the countrys exports during July-April (2022-23) were recorded at $ 23.174 billion against $ 26.247 billion, a decline of 11.71 percent and the imports decreased by 28.44 percent during the period and is declining from $ 65.519 billion last year to $ 46.887 billion. To get a rebate on the excessive imports, there is only a possibility of the local production of goods for exports. As Pakistan is carrying limited space constrained by geographic and geo-economic factors and is pressured to fight back against this economic turmoil. Therefore, family businesses undoubtedly have a considerable impact on the economy at large. It appears obvious as these structures are likely to be more responsive to contribute their own financial resources such as local manufacturing when there are fiscal constraints. This may narrow down costs and expenditures while strengthening the financial capability of the business. Strong family businesses are an asset for every national economy, advertising not only the name of the owners family but the country they belong to as well. They have a tendency to network within the country for the domestic production of goods to address excessive imports over a period of time.
The question is why do we need to support family-owned setups more? I believe that family businesses advocating the next generation of members in the business leadership and work- and knowledge force, increasing their competitive edge over other non-family firms and gaining access to their youth. I am in correspondence with the families that are actively participating to be the convenient and fast transition of leadership within generations of the same family or clan. The expedience in transition could, in turn, maintain long-term business policies that are already in place or complete those goals successfully. Thus, the instituting of good governance mechanisms can alleviate problems, and help companies sustain growth, overcome short lifecycles and recession.