Chapter 3The Development of Family-Owned Businesses in Saudi Arabia
DEFINING THE FAMILY-OWNED BUSINESS (FOB)
Before the specifics concerning family-owned businesses (FOBs) in Saudi Arabia, a definition of this form of doing business and some key concepts are in order.
There are many definitions of FOBs that pare down its few but essential operating parts into concise descriptions. One of the most simple yet useful definitions of an FOB that I have found, however, is by the International Finance Corporation, which in its IFC Family Business Governance Handbook 2008 says, “A family business refers to a company where the voting majority is in the hands of the controlling family; including the founder(s) who intend to pass the business on to their descendants.”1 The IFC continues with its definition to deem the terms “family business,” “family firm,” “family company,” “family-owned business,” “family-owned company,” and “family-controlled company” as interchangeable in usage in its publication. We shall do the same in this book.
The IFC Family Business Governance Handbook also offers what it views as several insightful attributes of the FOB as it defines some of their distinguishing characteristics. In citing the inherent strength of the family's commitment to the firm's longevity, the IFC states:
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