KPMG Private Enterprise collaborated with the STEP Project Global Consortium to uncover the important link between legacy and long-term business performance. Based on insights from 2,683 family business leaders in 80 countries, territories and regions, the report explores how they contribute to long-term business and sustainability performance, and carry what is important to families into the future. 43% reported a combination of high business, environmental and social performance, and strong legacies — which reinforces the important link between the strength of family business legacies and their business performance.

The report analysed four types of legacy:

Material legacies include tangible assets that underly families’ financial value and wealth. A biological legacy — such as the family name and bloodline — reflects a commitment to sustaining the family’s cohesiveness and the continuity of the business. Social legacies are built on the family’s shared values, attitudes and beliefs, and the focus tends to be on building strong community relationships and making the world a better place. Meanwhile an identity legacy comprises the shared family stories and rituals that are woven into the business through the family’s identity, values and history.

The highest percentage of family businesses with a high social legacy score were found in the Middle East and Africa, which also had the highest legacy score overall (81%). In those countries, the cultural aspect of collectivism is much stronger than individualism and higher than what is typically found in the US, the UK and other European countries. This region also had the highest identity legacy score, which suggests there is a strong emphasis on family history and values.

A UAE perspective

The rich legacy of a family business is greater than the sum of its parts, with different elements of legacy contributing to the performance of the business, the strength of family bonds and the ability to sustain its entrepreneurial orientation across multiple generations.

The choices that one generation makes affect the choices of every generation that follows. Legacy is born out of the entrepreneurial vision of the first-generation founder, and it builds as a once-fledgling business grows into a multi-generational family enterprise. The future generation of family business successors in the UAE is prioritizing the expansion of their enterprises into new industries and markets. With 87% of young family business members in Dubai expressing a personal interest in generative Artificial Intelligence (AI), the evolving landscape of this sector is embracing a growing demand to leverage this technology in driving innovation and improving efficiency.

The NextGen: prioritizing environmental solutions

The younger generation within family businesses - the NextGen - are playing a key role in ensuring a sustainable future. They are actively engaged and committed in sustainable development and a have a strong sense of responsibility compared to previous generations:

  • 64% of Middle East NextGen believe their business has the responsibility to fight climate change (vs. 34% of current gen)
  • 58% of NextGen agree that their family business can lead the way on sustainable business practices
  • 58% of companies in the Middle East see enhancing their brand and reputation as the top benefit for implementing an ESG strategy

Another challenge is the generation gap in the willingness to adopt technology which is crucial for addressing climate change. There are differing views in family business generations regarding the importance of adopting innovation:

  • 44% of the current generation believe that the business already has strong digital capabilities, but only 33% of NextGen say the same
  • 84% of Middle East CEOs say they are investing in automation this year, and 66% plan to deploy advanced technology such as cloud tech and artificial intelligence 

The role of UAE family businesses in COP28

The engagement of family businesses in the nation’s sustainability agenda has significantly contributed to achieving the objectives of COP28 in the UAE. It was an opportunity to showcase the UAE’s commitment to a sustainable future and lead by example. The alignment of family businesses with the sustainability agenda played a crucial role in the success of COP28:

  • Family businesses in the UAE collectively wield immense financial resources. Financial wealth generated by ultra-high-net-worth individuals and family offices is projected to increase to 46% of the economy by 2026 and the UAE’s financial wealth will continue to grow at a compounded annual rate of 6.7% to reach $1 trillion by 2026. These resources can be strategically deployed to invest in Sustainable Development Goals (SDGs) and bridge the financing gap required for transformative sustainability projects. By leveraging their financial strength, family businesses can be the driving force behind sustainable infrastructure, clean energy, and innovative solutions that were showcased at COP28.
  • The objectives of family businesses align seamlessly with the aspirations of COP28, emphasizing the need for businesses to balance profitability with environmental and social responsibility. These goals include maintaining economic prosperity, integrating responsible environmental and social practices, and taking a leadership role in supporting people and planet initiatives through philanthropy. 
  • Long-term perspective, effective governance, and engaging multiple generations are all crucial elements for both family businesses and the sustainability journey.

As the world gathers to address climate change and sustainability, the UAE’s family businesses stand ready to be catalysts for sustainable success, leaving a legacy for generations to come.

Staying ahead: trends shaping UAE family businesses

The UAE aims to become the regional centre for family businesses, with Dubai as a hub for fund management professionals, supporting family-owned businesses and millionaires in professional asset management. These businesses collectively employ hundreds of thousands of people in the UAE.

Current trends within this sector are focused on future-proofing their continued success in a changing world. This requires:

  • Embracing digital transformation: family businesses are increasingly recognizing the importance of digitalization. This goes beyond cost reductions and involves utilizing technology to enhance customer experiences, improve data analysis, and gain a competitive edge.
  • Succession planning and governance: with new legal frameworks like Dubai Law No. 9 of 2020, family businesses have more options for structuring ownership and management. Family contracts and trust structures can ensure a smooth transition to future generations. 
  • Considering initial public offerings (IPOs): listing on the stock exchange is becoming a viable option for some family businesses, allowing for growth capital and potentially broader ownership. 
  • Focusing on sustainability and social impact: consumers are increasingly looking for brands that align with their values. Family businesses are well-positioned to integrate sustainability practices and give back to the community, strengthening their reputation. 

These trends highlight the adaptability and innovation family businesses in the UAE are embracing to secure their place in the future. The government's support through initiatives like the Dubai Family Business Office further strengthens this sector's position as a driving force in the UAE's economy.

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Unlocking legacy — The path to superior growth in family businesses

Balancing tradition and change for enduring success

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