Modern Economy, 2011, 2, 625-632
doi:10.4236/me.2011.24070 Published Online September 2011 (
Copyright © 2011 SciRes. ME
Performance of Family and Non-family Firms with
Self-Selection: Evidence from Dubai
Belaid Rettab1, Azzeddine Azzam1,2,3
1Dubai Chamber of Commerce & Industry, Dubai, UAE
2University of Dubai, Dubai, UAE
3University of Nebraska-Lincoln, Lincoln, Nebraska, USA
Received April 24, 2011; revised June 20, 2011; accepted June 30, 2011
This paper contributes to the literature on comparative performance of family and non-family businesses by
accounting for self-selection and by comparing performance within and across sectors. Using an extensive
data set of Dubai businesses in the four different major sectors in the Dubai economy (construction, manu-
facturing, services, and trading); we find that the sector matters. Family businesses outperform nonfamily
businesses in trading, followed by construction as a far second. Performance of family businesses is weakest
in manufacturing and services, only in trading did family businesses outperform nonfamily exporting busi-
nesses in other sectors. Reasons for that are discussed and policy implications are drawn. We also find strong
evidence of self-selection bias.
Keywords: Business Comparative Performance, Family Businesses, Self-Selection, Sector Performance,
Dubai Enterprises
1. Introduction
In their overview of family business performance,
Jackiewicz and Klein (2005) [1] report that of the 41
studies that compared family to nonfamily businesses, 25
find the former outperform the latter, 5 find the opposite,
and 11 find no significant difference between the two
types of firms. Dyer (2006) [2] argues that such differ-
ences in results are not surprising given the differences in
approaches and definitions of family enterprises (see also
What is surprising, however, is that, as far as we know,
none of the studies controlled for self-selection bias [8]
and most do not assess differences in performance within
and across industries. If selection bias is present, the ob-
served differences in firm performance are attributed to
business type when they may be due to differences be-
tween the entrepreneurs who chose between the two
types of business structures. Similarly, if a business’
amenability to family versus nonfamily management
hinges on the type of industry, it is crucial to have indus-
try an additional contextual variable.
In this paper we use an extensive data set of Dubai
businesses to test for differences in family versus non-
family firms within and across the four major sectors in
the Dubai economy (construction, manufacturing, ser-
vices, and trading). Dubai is a particularly interesting and
representative case study of the Gulf region, where, until
the recent financial crisis, economic growth has been
phenomenal and little is known about the relative per-
formance of family businesses and thereby their relative
contribution to such growth. Family businesses comprise
most of the enterprises in the Gulf region [9]. They ac-
count for over 90% of all commercial activities in the
Gulf region, compared to rates ranging from 65% to 80%
in other regions of the world.
The remainder of the article is organized as follows.
The next section reviews and discusses the literature on
comparative performance of family and nonfamily firms.
Section 3 defines a family business in general, and Sec-
tion 4 develops a working definition for a family busi-
ness in Dubai. Section 5 presents the data, method, and
results. Section 6 summarizes and concludes.
2. Family versus Non-family Performance
Casting comparative performance of firms in terms of
family versus non-family businesses is a useful approach
to capturing the influence of business structure on busi-
ness performance. One particularly important element of
structure, discussed extensively in the literature, is the
degree of ownership and management control [2,10-13]).
It is generally accepted that concentration of control
can bring about economic entrenchment and misalloca-
tion of resources [14]. Misallocation is attributed to the
well-known principle-agent problem but also to the prin-
cipal-principal conflict emphasizing the problem of mi-
nority shareholders [15,16]). The latter conflict is com-
monly present in emerging economies with institutions
that encourage control and tolerate bad corporate gov-
ernance. In this context, does high concentration of con-
trol, as exhibited by a family enterprise, affect firm per-
formance? And what is the role of the supporting institu-
tions operating in the background?
On one hand, institutions are found to significantly
determine business performance [17-20]. On the other
hand, in the absence of sound institutions and regulatory
framework, is ownership and control able to provide a
less enforced, but equally potent, internal regulatory en-
vironment for business? In China for example, it is re-
ported that family businesses provide alternative frame-
work for businesses to “reduce risk in uncertain, complex
and potentially hostile environments” [21].
Furthermore, the degree of concentration of ownership
and control is motivated by business strategies, strategies
to manage risks stemming from surrounding institutions.
Minority shareholders in publicly owned companies have,
in general, highly diversified investment portfolios and
are therefore considered more likely to accept potentially
risky ventures in return for lucrative earnings. Con-
versely, the owner of a family firm is likely to have a
more concentrated investment portfolio, holding a high
proportion of personal wealth within the own firm
[11,22-24]). Consequently, does this excessive cautious
behaviour hinder family firm performance [12,22], and
results in sub-optimal capital asset structure and per-
Some researchers [3] suggest that due to corporate
governance issues, such as the lack of transparency and
accountability, family enterprises remain small and,
therefore, have less access to capital. However, the evi-
dence is inconclusive across samples. Jorissen et al.
(2005) [25] report that once demographic differences are
controlled for, family firms face more financing prob-
lems than non-family firms with regards to long- term
financing [4,23].
In this connection, Anderson and Reeb (2003) [4]
contend that family owners are predominantly concerned
with “stability and capital preservation” rather than firm
growth, performance and size. However, if stability is
used as an indicator of firm performance, Lee (2006) [26]
would agree and Suehiro (2001) [27] would disagree that
family firms are more stable in times of economic
downturn than non-family enterprises.
What transpires from the previous discussion is that,
because of the several characteristics of family versus
nonfamily firms and the interaction between those char-
acteristics, there is no clear a priori expectation that one
type of firm should outperform the other. That expecta-
tion becomes less clear when considering contextual
variables such as firm size and industry. Hence, relative
performance of family versus non-family firms is an em-
pirical question, and preponderance of evidence from
different studies is what ultimately shapes the metaview
of the superiority of one business over the other. Our
empirical analysis for Dubai is a contribution to shaping
that metaview. Our starting point is to discuss in the next
section the different definitions for a family business
used in the literature. After that we discuss our definition
of what constitutes a family business in Dubai.
3. Definition of a Family Business
The assortment of family business attributes outlined in
section 2 has led to an assortment of definitions of a
family business in the literature. In their survey of family
business literature, Chua et al. (1999) [28] found 21 dif-
ferent definitions.
Basically, family business attributes are related to one
of three components: family, ownership, and manage-
ment; and the definition of a family business depends on
the overlap of the three. This is illustrated in the Venn
diagram in Figure 1. The three components plus the four
overlapping areas constitute seven possible connections,
with each connection tied to some degree of influence.
Individuals with only one connection to the business
would lie in 1, 2, or 3, and those with more than one
connection would lie in any of the other intersections.
For example, intersections 4, 5, and 7 identify family
members who are directly involved in the business man-
agement and its ownership. Intersections 2, 3, and 6 in-
clude managers, employees and possible co-owners from
outside the family.
Several examples from the literature will serve to il-
lustrate how different authors in different contexts have
devised different definitions based on the overlapping
components shown in the Venn diagram. Westhead and
Cowling (1997) [6] suggested the following 7 definitions
for a family business:
1) The enterprise is perceived by the chief executive,
managing director, or chairman to be a family business.
2) More than 50% of ordinary voting shares are
owned by members of the largest single-family group
related by blood or marriage.
3) 1 and 2
4) 3 and one or more of the management team is
Copyright © 2011 SciRes. ME
Ownershi p
2 3
Figure 1. Overlapping Components of a Family Business.
Source: Gersick et al., (1997) [29].
drawn from the largest family group that owns the busi-
5) 3 and 51% or more of the management team is
drawn from the largest family group that owns the busi-
6) 4 and the enterprise is owned by second-generation
or family members
7) 5 and the enterprise is owned by second-generation
or family members
4. Definition of a Family Business in the
Context of Dubai
The preceding conceptual framework and applications
not only require information on family membership, de-
gree of ownership and management by family members;
they also require establishing a cut-off point at which the
degree of influence is significant enough to designate a
business as a family business. Unfortunately, that infor-
mation is not available for Dubai
What is available is a categorization of family versus
non-family businesses in Dubai devised by Rettab (2008)
[30] (Table 1 ). The definition draws on UAE’s company
law which requires 51% ownership of a business by
UAE nationals, and on labour law regulating em-
ployer-employee1 relationship.
According to Table 1, a business that is more than
50% owned and managed by UAE nationals is defined as
a family business, while all other businesses are defined
as non-family businesses. The underlying rationale is as
A business that is fully owned by UAE nationals in
almost all cases belongs to one single UAE national
owner, regardless of the size of the business. Hence, all
Table 1. Categories of UAE Owned Businesses in Dubai
according to ownership, Management, and Number of
Owners and Managers.
Numbers of
Owners and
Ownership Management Category
3 1 100% Family 100% Family One-Man Family
2 2 > 50% Family 100% Family
or Shared Family Business
4 2 > 50% Family 100%
(The Sponsorship
1 > 50% Family 100% Family
or Shared
1st Category
Family Business
> 50% Family 100%
(The Sponsorship
< 50% Family 100% Family
or Shared
3 or more
< 50% Family 100%
1 Numbers in column refer to the categories by Westhead and Cowling
(1997) [6]. Source: Rettab (2008) [30].
fully UAE national owned businesses are family busi-
Defining businesses with a share of foreign equity as
non-family businesses is supported by the roles of the
UAE partner in the day-to-day management of the busi-
ness. There are three roles. One, in almost all small
businesses (less than 10 workers) with foreign equity, the
formal owner of the license is the so-called the UAE
national sponsor or the silent partner. The partnership is
a well established sponsorship system enforced by law.
In this case, since the capital is wholly provided by the
foreign partner(s) who attend to all activities and take all
decisions related to the conduct of the business, the for-
eign partners are the actual owners and the managers in
full control. The UAE partner does not actively partici-
pate in the day-to-day business management but spon-
sorship is just an arrangement to conform to the Federal
Company Law. Therefore, small businesses with foreign
equity are classified as nonfamily businesses.
Two, in medium-sized businesses (10 to 19 workers)
with foreign equity, UAE nationals are more likely to be
non-silent partners, but their presence in the firm is
mostly for formality reasons and for facilitating access to
local authorities and agencies, as well as monitoring lo-
cal employees and local clientele. However, control and
management remain in the hands of foreign partners.
Three, large businesses (20 employees or more) with
foreign equity are formally organized and ownership of
capital and liabilities of owners are stipulated in legal
documents. However, in most such businesses, although
the UAE partner is a member of the board of directors
1Residency visa of all expat employees is dependent on employment
contracts. Once a contract is terminated, the employee must either
leave the country or find another employer. The Law also applies to
Copyright © 2011 SciRes. ME
because of his/her share in capital investment, deci-
sion-makers are usually foreigners. Therefore, large
businesses with foreign equity are also assumed to be
non-family businesses.
5. Data and Analysis
The data set we extract information from to examine
the comparative performance of family versus nonfamily
businesses comes from the 2005 Dubai Chamber’s
membership database. The total number of members is
20,576; 10,597 are family businesses and 9979 are non-
family businesses. Reported by each business are income,
exports, number of owners, number of employees,
paid-up capital, cohort (whether a business started opera-
tion before or after 1990), location (whether or not a
business is located in the free zone), and the industry
category to which a business belongs. The industry
categories are manufacturing, construction, trading, and
Performance is represented by the following linear
 
nijki jkijknijk
ijknijk ijknijk
jk jk
 
 
where Y is income, µ is the intercept, B is business type,
I is industry category, E is export status, OWN is the
number of owners, CAP is paid-up capital, EMP is num-
ber employees, and SS is a measure of self-selection. The
subscript nijk refers to nth firm, for n = 1,…20576; in the
ith business, where i = 1 for a family business and i = 2
for a nonfamily business; in the jth sector, where j=1 for
manufacturing (MAN), j = 2 for construction (CON), j =
3 for trading (TRD), and j = 5 for services (SRV). The
subscript k is equal to 1 if the firm exports and 2 if it
does not.
Although the choice of variables is ex-post, as it is
dictated by what is available in the data set, the variables
capture the essence, although imperfectly, of some de-
terminants of family versus non-family firms outlined in
Section 2. The number of owners is a proxy for agency
costs, i.e., the larger the number of owners the higher the
agency costs. Paid-up capital is a proxy for risk and ex-
tent of internal financing. The number of employees
could, as has been assumed in past work, be an indicator
of the size of the firm as well as agency costs. With a
larger pool of employees, issues related to moral hazard
take on crucial importance.
The variable SS is the inverse mills ratio calculated
from a Probit model as suggested by Heckman (1979) [8].
The ratio controls for selection. A positive (negative) γ
that is statistically different from zero indicates presence
of selection bias that overstates (understates) the effect
family business structure on performance. The bias is
overstated (understated) if stronger (weaker) “business
people” chose to run a family business. The error enijk ~
iid N(0, σ2
ijk ) accounts for the error structure which al-
lows for heterogeneous variances by business type, in-
dustry, and export status.
The Probit model explains belonging to a family or a
nonfamily business (Bi) as a function of the number of
owners (OWN), paid-up capital (CAP), number of em-
ployees (EMP), Location (LOC), industry category (I),
and an indicator (COH) which equals 1 if the business
started before 1990 and zero after 1990. The period after
1990 represent the take-off growth period for Dubai.
Results of the Probit model are presented in Table 2.
What transpires from the Probit results is that firms
with more owners are less likely to organize as family
businesses, as were firms who started business after 1990,
a period which witnessed strong FDI inflow to Dubai.
The rest of the variables all increase the likelihood of a
firm organizing itself as a family business.
From the Probit results, we construct the mills ratio:
,,SSXX ,
is the density function,
the distribution function, and θ is the vector of parameter
estimates from the Probit model reported in Table 2.
Before estimating the linear statistical model of per-
formance (Equation (1)), we conducted a preliminary
check of the distribution of the regressors through histo-
grams. The check revealed that the regressors are highly
skewed, with the largest values of some regressors often
being the smallest values. A rule of thumb is that if the
largest value is more than three times larger than the
smallest value, a log transformation of the regressors is
needed, mitigating the problem of extreme outliers [31].
The performance equation was estimated using the
SAS Proc Mixed routine [32] by first transforming the
variables Y, OWNERS, CAP, and EMP into loga-
rithms and incorporating a different residual variance
ijk for each business (i = 1,2) by industry ( j = 1,2,3,4)
by export status combination (k = 1,2). Estimates of the
Table 2. Parameter Estimates of the Probit Model
Parameter EstimateStandard Error Chi-SquarePr > χ2
Intercept 0.6940.0897 59.96 < .0001
OWN –0.6500.0072 8133.68< .0001
CAP 0.0670.0110 38.21 < .0001
EMP 0.00050.0001 85.04 < .0001
LOC DUBAI1.1720.0856 187.50 < .0001
I CON0.1540.0393 15.53 < .0001
I MFG0.4540.0475 91.30 < .0001
I SRV0.675 0.0325 431.53 < .0001
1990 –0.3800.0229 274.74 < .0001
Copyright © 2011 SciRes. ME
Copyright © 2011 SciRes. ME
16 residual variances were obtained by performing a
separate regression for each one of the 16 combinations.
The solution for fixed effects yielded 93 parameter esti-
mates, including the intercept.
The first hypothesis of interest is self-selection bias.
The coefficient γ for the variable controlling for selection
is 0.239 and a standard error 0.049, indicating (statisti-
cally) strong presence of self-selection bias that tends to
overstate the effect of family business structure on per-
formance. The implication is that analysis for compara-
tive performance of family and nonfamily businesses in
the Dubai case should account for self-selection bias.
The next hypotheses of interest are those related to the
statistical importance of the fixed effects, the covariates,
and interactions thereof. Results are reported in Table 3.
Individually, the fixed effects B, I and E are highly
significant and so are the covariates OWN, EMP, and
CAP. The interactions are all highly significant with
three exceptions: business type by exports status (B*E),
industry type by export status (I*E), and business type by
industry by numbers of owners (OWN*B*I).
Next we take a look at the comparative performance of
family business vis-à-vis nonfamily businesses by indus-
try and by export status. Table 4 compares mean per-
formance of family and nonfamily businesses in the con-
struction sector. The rows highlighted in gray indicate
instances of superior performance of family businesses.
The first highlighted row in gray is read as follows: a
family business in the construction sector that does not
export outperforms a nonfamily business in construction
that does not export. The second highlighted row indi-
cates that a family business in construction that does not
export outperforms a nonfamily business in manufactur-
ing that does not export. The rest of the rows can be read
in a similar manner.
Results for construction can be summarized as follows.
Family businesses in construction outperformed non-
family businesses in 44% of all cases, outperformed
nonfamily businesses in the construction business only
when nonfamily businesses are not exporters, and in no
other instance did family businesses outperform non-
family businesses who export.
Results for manufacturing are in Table 5. It appears that
family businesses in manufacturing outperform non-
family businesses only in 25% of the cases, outper-
formed nonfamily businesses in manufacturing only
when nonfamily businesses in manufacturing are not
exporters, and, as in construction; in no other instance
did they outperform nonfamily businesses who export.
In the services industry (Table 6), family businesses
outperformed nonfamily business only in 25% of the cases,
did not outperform nonfamily businesses in services only
when the family business exports and the nonfamily busi-
ness does not, and in no other instance did they outper-
form nonfamily businesses in services who export.
The outcome for the trading sector is radically differ-
ent (Table 7). Family businesses outperform nonfamily
business in 7% of the cases. Trading family businesses
who do not export outperform only nonfamily businesses
who do not export. However, trading family businesses
Table 3. Type 3 Tests of Fixed Effects.
Effect Num DF Den DF F Value Pr > F
B 1 2114 17.26 < .0001
I 3 1677 8.99 < .0001
E 1 182 107.93 < .0001
B*I 3 1659 10.82 < .0001
B*E 1 182 0.01 0.9098
I*E 3 172 0.15 0.9300
B*I*E 3 172 3.12 0.0275
OWN 1 6011 63.12 < .0001
CAP 1 1824 3210.36 < .0001
EMP 1 1033 758.01 < .0001
OWN*B 1 2776 13.24 0.0003
CAP*B 1 1819 11.41 0.0007
EMP*B 1 1001 20.76 < .0001
OWN*I 3 2275 10.64 < .0001
CAP*I 3 1444 12.54 < .0001
EMP*I 3 1349 12.05 < .0001
OWN*B*I3 2290 1.49 0.2153
CAP*B*I3 1435 17.29 < .0001
EMP*B*I3 1342 6.47 0.0002
Table 4. Comparative performance of family businesses in construction.
B I E B I E Estimate Standard ErrorDF t Value Pr > |t|
FAM CON NO NFAM CON NO 0.2677 0.1000 1135 2.68 0.0076
FAM CON NO NFAM CON YES –0.02721 0.1483 584 –0.18 0.8545
FAM CON NO NFAM MFG NO 0.5384 0.1152 1158 4.67 < .0001
FAM CON NO NFAM MFG YES –0.1127 0.1224 1079 –0.92 0.3577
FAM CON NO NFAM SRV NO 0.2963 0.08637 794 3.43 0.0006
FAM CON NO NFAM SRV YES –0.04539 0.1362 508 –0.33 0.7390
FAM CON NO NFAM TRD NO –0.04079 0.07347 519 –0.56 0.5790
FAM CON NO NFAM TRD YES –0.3853 0.066 578 –5.77 < .0001
FAM CON YES NFAM CON NO 0.7182 0.2322 32.4 3.09 0.0041
FAM CON YES NFAM CON YES 0.4233 0.2619 49.5 1.62 0.1124
FAM CON YES NFAM MFG NO 0.9889 0.2389 36.3 4.14 0.0002
FAM CON YES NFAM MFG YES 0.3378 0.2481 40.2 1.36 0.1808
FAM CON YES NFAM SRV NO 0.7468 0.2259 29.2 3.31 0.0025
YES NFAM SRV YES 0.4051 0.2546 44.5 1.59 0.1186
FAM CON YES NFAM TRD NO 0.4097 0.2222 27.3 1.84 0.0760
FAM CON YES NFAM TRD YES 0.06517 0.2261 27.8 0.29 0.7753
Copyright © 2011 SciRes. ME
who export outperform all other nonfamily businesses
who export in all sectors except those who also trade.
Still, in the latter case, there is no statistical difference
between the two.
6. Summary and Conclusions
The message from the preceding results is that industry
and institutions matter. In terms of preponderance of evi-
ence by sector, as measured by the statistically significant d
cases in which family businesses outperform nonfamily
businesses; family businesses are strongest in trading, fol-
lowed by construction as a far second. Family businesses
are weakest in manufacturing and services. More impor-
tantly, only in trading did family businesses outperform
nonfamily exporting businesses in other sectors.
There are three distinguishing characteristics of the
trading sector in Dubai that may explain the superior per-
formance of family businesses in that sector relative to
other sectors. The first is institutional. UAE families in
Table 5. Comparative performance of family businesses in manufacturing.
B I E B I E Estimate Stan-dard ErrorDF t Value Pr > |t|
FAM MFG NO NFAM CON NO 0.1152 0.1032 255 1.12 0.2654
FAM MFG NO NFAM CON YES –0.1798 0.1506 417 –1.19 0.2331
FAM MFG NO NFAM MFG NO 0.3858 0.1175 351 3.28 0.0011
FAM MFG NO NFAM MFG YES –0.2652 0.1249 435 –2.12 0.0343
FAM MFG NO NFAM SRV NO 0.1438 0.08782 157 1.64 0.1036
FAM MFG NO NFAM SRV YES –0.1979 0.1373 336 –1.44 0.1504
FAM MFG NO NFAM TRD NO –0.1933 0.07806 113 –2.48 0.0147
FAM MFG NO NFAM TRD YES –0.5379 0.07202 126 –7.47 0.0001
FAM MFG YES NFAM CON NO 0.3059 0.1528 251 2.00 0.0464
FAM MFG YES NFAM CON YES 0.01097 0.1950 421 0.06 0.9552
FAM MFG YES NFAM MFG NO 0.5766 0.1629 311 3.54 0.0005
FAM MFG YES NFAM MFG YES –0.07450 0.1760 368 –0.42 0.6723
FAM MFG YES NFAM SRV NO 0.3345 0.1433 198 2.33 0.0206
YES NFAM SRV YES –0.00721 0.1852 360 –0.04 0.9690
FAM MFG YES NFAM TRD NO –0.00261 0.1370 167 –0.02 0.9848
FAM MFG YES NFAM TRD YES –0.3472 0.1432 175 –2.42 0.0164
Table 6. Comparative performance of family businesses in services.
B I E B I E Estimate Standard Error DF t Value Pr > |t|
FAM SRV NO NFAM CON NO –0.04689 0.06359 2694 –0.74 0.4610
FAM SRV NO NFAM CON YES –0.3418 0.1269 394 –2.69 0.0074
FAM SRV NO NFAM MFG NO 0.2238 0.08432 1010 2.65 0.0081
FAM SRV NO NFAM MFG YES –0.4273 0.09479 813 –4.51 < .0001
FAM SRV NO NFAM SRV NO –0.01828 0.02726 3481 –0.67 0.5026
FAM SRV NO NFAM SRV YES –0.3600 0.1093 294 –3.29 0.0011
FAM SRV YES NFAM CON NO 0.4823 0.1831 124 2.63 0.0095
FAM SRV YES NFAM CON YES 0.1874 0.2197 215 0.85 0.3946
FAM SRV YES NFAM MFG NO 0.7530 0.1913 145 3.94 0.0001
FAM SRV YES NFAM MFG YES 0.1019 0.2028 169 0.50 0.6159
FAM SRV YES NFAM SRV NO 0.5109 0.1738 102 2.94 0.0041
FAM SRV YES NFAM SRV YES 0.1692 0.2100 183 0.81 0.4213
FAM SRV YES NFAM TRD NO 0.1738 0.1704 94.2 1.02 0.3104
YES NFAM TRD YES –0.1707 0.1756 97.5 –0.97 0.3333
Table 7. Comparative performance of family businesses in trading.
B I E B I E Estimate Standard Error DF t Value Pr > |t|
FAM TRD NO NFAM CON NO 0.2043 0.05755 2193 3.55 0.0004
FAM TRD NO NFAM CON YES –0.09064 0.1237 363 –0.73 0.4640
FAM TRD NO NFAM MFG NO 0.4749 0.08124 918 5.85 < .0001
FAM TRD NO NFAM MFG YES –0.1761 0.09112 728 –1.93 0.0537
FAM TRD NO NFAM SRV NO 0.2329 0.02861 3591 8.14 < .0001
FAM TRD NO NFAM SRV YES –0.1088 0.1091 291 –1.00 0.3192
FAM TRD YES NFAM CON NO 0.6178 0.07954 2319 7.77 < .0001
FAM TRD YES NFAM CON YES 0.3229 0.1448 425 2.23 0.0263
FAM TRD YES NFAM MFG NO 0.8884 0.09806 1169 9.06 < .0001
FAM TRD YES NFAM MFG YES 0.2374 0.1182 901 2.01 0.0449
FAM TRD YES NFAM SRV NO 0.6464 0.06198 2177 10.43 < .0001
FAM TRD YES NFAM SRV YES 0.3047 0.1326 352 2.30 0.0221
FAM TRD YES NFAM TRD NO 0.3093 0.04132 1015 7.48 < .0001
FAM TRD YES NFAM TRD YES –0.03527 0.05844 1296 –0.60 0.5463
Copyright © 2011 SciRes. ME
the trading sector have historically been granted exclusive
commercial licenses by the government. To the extent
that such licenses might lead to monopoly power, the
implications for performance are clear. Second, because
successful trading has historically been and still is tied to
strong family networks, the stronger performance of fam-
ily businesses is a manifestation of the strength of those
networks. The strength of family network also helps ex-
plain why nonfamily businesses who export are on par
with family businesses who also export. Nonfamily busi-
nesses in the trading sector also rely on family and non-
family networks in native countries of the owners of non-
family businesses. Third, trading has the least techno-
logical requirement, thus exposing UAE traders to less
competition from the rest of the sectors, where the tech-
nological requirements are relatively higher.
The policy implication is that in order to bring Dubai
family businesses on par with nonfamily businesses in
the other more technologically demanding sectors, a
technology adoption agenda needs to be targeted towards
family businesses in those sectors.
7. References
[1] P. Jaskiewicz and S. Klein. “Family Influence and Per-
formance—Theoretical Concepts and Empirical Results,”
Paper Presented at the FERC Conference, Portland, Ore-
gon, 2005.
[2] W. G. Dyer Jr., “Examining the ‘Family Effect’ on Firm
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