Stewardship theory of corporate governance and succession planning in family businesses of UAE: views of the owners

Purpose This paper aims to explore corporate governance (CG) and succession planning in family-owned businesses in the United Arab Emirates (UAE). Design/methodology/approach Semi-structured interviews are conducted with 16 owners and heirs of UAE family businesses. The interviews - face-to-face and asynchronous electronic - are conducted instead of a questionnaire to get an in-depth analysis of the topic in the context of both medium- and large-sized family businesses. Findings The responses are mixed with regard to governance challenges (duality, gender, internal control, transparency, etc.). The majority of the interviewees indicate that succession planning remains one of the biggest challenges for family businesses in the UAE. Fifteen of the sixteen interviewees document that a sound succession strategy must be in place to ensure the continuity of the business and prevent future disputes among potential successors. Similarly, the respondents also emphasise the importance of transparency and accountability for the sustainability of family businesses. The sustainability of family businesses relies on many aspects, such as national regulations, corporate systems and the succession process. Finally, most of the respondents from medium-sized companies opined that incorporating CG is a time-consuming and expensive process. Practical implications The interviewees supported stewardship theory in case family members are occupying positions on the board as they have more long-term commitment and a greater sense of belonging to the business (socio-emotional wealth) compared to non-family members. The interviewees acknowledge that the lack of professionalism and conflicts of interest among family members can be offset by recruiting non-family members. Originality/value Family businesses are particularly significant in the Arab world as they account for over 60% of gross domestic product (GDP) and use above 80% of the workforce which make them interesting research subject. In addition, this paper explores the CG challenges faced by both large- and medium-sized family businesses in the UAE within the theoretical framework of stewardship theory.