Research methods

Project proposal Date 11/5/2011

Family business: Succession, finance and going public

Introduction
The companies and businesses play a vital role in the process of economic development of the country, through the use of available resources and investment in order to provide consumer goods and service contribute to the development of the domestic market, and thus develop the national economy in general. Under the changes and developments of international economic tide of globalization and the requirements of the market opening and liberalization of trade restrictions to protect, in addition to the accession of the WTO, it is natural that companies are family, especially small ones or medium risk of a serious threat to its existence and continuity that sooner or later , and therefore it became necessary to work on the development of family companies, especially through its transformation into other forms of public shareholding as companies, bringing its capacity to address the fundamental challenges that result from these changes, as well as protect it from deterioration and collapse . In spite of this, but observes that successful family businesses do not show an interest in it, and do not wish to become a public joint stock companies or any other forms, and on the contrary, what was currently seen the desire of some public shareholding companies to switch to other forms. The question that arises now is :Why do not resort family businesses to switch to public shareholding companies, despite of what the shape of the advantages .And this study will address the importance of family businesses successfully transition to other legal forms of public shareholding as companies and the reasons that limit that .It will also address the conceptualization of how a family-owned businesses to go public .

Investigative problem With the economic development that has taken place in Syria during the past ten years that is since 2000 and until the date of this year there have been developments in the legislative, economic and investment at all levels, in the legislative area of the State issued a series of decrees, laws and decisions that make it easier to enter Syria market economy to suit the Syrian economy with the global economy and for there to be facilities for the balance between import and export and trade balance in order to be profitable with the Syrian others, and in the investment arena has provided a range of facilities the State of the investment process and emerged as a result of these facilities and the industrial cities built more than 10000 plant with a capital exceeded 250 billion Syrian pounds and has created 100 thousand jobs for the various disciplines. In the light of this reality and to complement the economic development of the Ministry of Finance issued Decree No. / 61 / re-evaluated on fixed assets for private companies and family and converted from family companies to joint stock companies and have a board that controls the nature of the company and develop and work on the escalation of production, sales, and since the This law, and until that date, the transformation of family firms into joint stock companies turning slow and the reason according to these companies that there will be revealed to the real capital and disclosed to the real profits in the future and this will rise to the companies and higher tax rates here and the problem started, but the outcome was converted these companies into joint stock companies will give her power to continue in the future and the development of construction and production of these parties Saliha family business owners and the new shareholders and a strong national economy Research Objectives The private sector plays an important role in Syria in the process of sustainable economic development for more than five years has increased investment in the private sector in the gross national product more than any of the public sector accounted for about 63% of the economic process in Syria. The State is seeking now to support private sector projects and there will be partnerships between the State and the sector at various levels, both in the industrial, agricultural, tourism or the service sector and infrastructure projects that was in the field of telecommunications or other. If we go back to the projects and companies registered with the Ministry of Industry and the Ministry of Economy and other ministries, we find that family

businesses account for about 99% of companies registered in Syria, if these companies are the real backbone of the Syrian economy, either through production or coverage of the domestic market or export to the States other and run the national workforce, which constitutes a basic source of livelihood for the family of Syria. And facilities provided by the State for these companies main goal is the result of a national sector, whether the introduction of modern equipment and mechanisms or product and have the status of a national quality contributes to the increasing number of financial and national income is the real power of the national economy and to find some kind of stability to meet the needs of citizens and raise the level of income to the owners of companies and employees at the level of Syria. Management hierarchy:

1- Management dilemma: Family business has yet to develop into mature entity in terms of listing into stock markets and have ethical attitude when it comes to financial management 2- management question: How can we encourage companies to employ good financial management and go public. 3-Research Question:
Does family business has the ability and desire to transform and have a sound financial management?

Research design (Hypothesis)

H01: Family business in Syria has succession clarity, business and financial strategy and a good propensity to go public.

H02: Family business in Syria Dont have succession clarity, business and financial strategy and a good propensity to go public.
Variables, duration & Sampling In this study, period from 1988 to 2008 has been approximately fix as a time frame for research. A plan for questionnaire is in place to cover the root cause of the issue under investigations, Sampling has been divided into two 1- Companies of around 20 units 2- Personnel of around 40 Data Analysis We would collect data to fit empirical analysis in which we may use and utilizing the application of statistical tools as: F-Statistic through statistical packages such (E-views).

Data source Primary and secondary data has been targeted in this research, Data collected from reliable sources: Damascus stock exchange, Damascus Chamber of Commerce, Ministry of Economics and Trade Family Firms, Economic Magazine, Periodical and from the Internet. We will also approach major libraries such as Assad library, Damascus university library, and Syrian Statistic Corporationetc.

Literature review & preview studies Family firms are said to be the originating form of any business activity (Wakefield, 1995), dominating the economic landscape of most major economies in the world (Shanker et al., 1996;Klein, 2000; Heck et al., 2001; Morck et al.,

2003; IFERA, 2003; Astrachan et al., 2003). Two thirds of all enterprises worldwide are said to be family-owned and/or managed (Gersick et al.,1997). In Germany, between 60% and 90% of all firms can be considered as family firms (Terberger, 1998). The life span of family firms is however often relatively short, as only a limited number survives the transition to the second generation, and hardly one-third even into the third (Beckhard et al., 1983; Neubauer et al., 1998; Shanker et al., 1996; Paisner, 1999). Due to this high importance of family firms, academia has finally recently begun to recognize their necessity as a research object (Chrisman et al., 2006). According to Dyer Jr., 2003, the field of management studies has paid insufficient attention the family firms unique theoretical and practical problems so far. The interest in family firm research has accordingly grown significantly increased in the recent years, leading to a distinctive legitimate and emerging field of study in business research. The underlying supposition therein is the question whether family firms do really behave differently from non-family firms, and if so, how and why they are different. Several researchers suggest that the family-form of organization holds essential advantages (Anderson et al., 2003; McConaughy et al., 1998). Nevertheless, despite the progress made especially in the last decade, research on family firms remains a new field which trying to gain legitimacy within management studies (Hoy, 2003), although much remains to be done, as Chrisman et al., 2003b state. This article attempts to summarize and structure current research on family firms by seeking out and the findings and themes from that literature of likely interest to business school scholars. Therefore, an analysis of the 120 most important articles on family firm research from the last two decades is applied. Family firm research has so far about 4 different streams on the individual level. Research objects on the level of the individual have predominantly been: - The company founders (e.g. Kelly et al., 2000; Kenyon-Rouvinez, 2001; Sorenson, 2000), - The next-generation members (e.g. Eckrich et al., 1996; Goldberg, 1996; Stavrou, 1998), - Women in family firms (e.g., Cole, 1997; Dumas, 1998; Fitzgerald et al., 2002; Poza et al., 2001), or - External managers within family firms (e.g. Mitchell et al., 1997).

Additionally, at group level, popular research topics have been: - Conflict within family firms (e.g., Boles, 1996; Drozdow, 1998; Habbershon et al., 1996; Kaye, 1996; Sorenson, 1999; Kellermanns et al., 2004), and - business succession (e.g., Cadieux et al., 2002; Davis et al., 1998; Harveston et al., 1997; Miller et al., 2003; Morris et al., 1997). Many writers have touched upon the issue of family business, it has been a difficult task to choose among them, however, we picked from the study by Dr. Mammon Hamadan which has been presented in the conference of family business in Syria during the period ( 15-16/11/2009) in which he studied ( the advantages of transferring to joint-stock companies ). He clarified that the advantages could be as follow: 1234Solving the ownership problems. Solving the management problems. Solving the financial problems. Internal and external competitiveness'.

He also wrote about experiences in real life like: The experience of Thailand : Register most family businesses in Thailand, the stock market in order to finance. The experience of Pakistan :Integration of many family businesses to form larger companies able to compete and development . India's experience the formation of associations between family businesses like shareholding companies where ownership separated from management where the formation of a unified management on behalf of the Corporate Board MCB Murugappa.

The experience of Bahrain: Conversion of people to go public after 42 years of being a family company in 2005 .And became a leading industrial and commercial companies. Says Vice President of the Board of Directors of people : The transformation of the company from a family company into a public

shareholding company gave the force, and expanded the base of participation by citizens in contributing to development and profitability, in a kind of self-control in the management of the company.? Successful experience of Nass Corporation as a joint family has encouraged some companies to switch to joint stock companies. The experience of Saudi Arabia: There are many family businesses that have turned a bank to go public with Al Rajhi And companies such as the World moved owned National Commercial Bank in Saudi Arabia, Companies closed as a bin Laden, And Abdul Latif Jameel Company .And Jarir Marketing Company in the opinion of Dr ..Mohamed Shams expert in quality management that :and can turn these companies to a closed stock company to maintain its identity and independence from any external interference, and better to be a joint stock company to enter the family members as premium for the decisions of the Governing Council, however, the family and making them larger and the higher proportion in equities . Egypt's experience : Stock Market within the Nile is dedicated to the Egyptian stock exchange listing and trading of medium and small size to provide the required funding for the expansion and growth and to allow to lift their competitiveness and provide more employment opportunities within the framework combines the flexibility of the companies promising to provide protection for the rights of each of the listed companies and investors . Exchange is the Nile is the first market in the Middle East and North Africa for the medium and small companies, where the Nile Stock Exchange will provide funding opportunities and growth for companies with promising potential in all sectors and all countries in the region, including family businesses.

We also picked from the study by Dr. David Pistrui which has been presented in the conference of family business in Syria during the period (15-16 November, 2009) in which he studied ( governance strategies for family business continuity and growth). He clarified the problems that appear between shareholders and managers, Governance Systems, Processes, and Structures, and The Fundamentals of Good Governance.

He divided the governance into two sections : (Corporate Governance & Effective Governance). 1Corporate Governance - a system of structures and processes used to monitor, direct, and control a company and keep it accountable

2- Effective Governance - requires accountability between stakeholders (family, non-family management, owners, employees)

Questionnaire
Dear participant: You have the freedom to answer or not this questionnaire which is about the family business succession, finance and going public. This questionnaire will take from your time only five minutes or less. All the answers will be confidential. Please answer the following questions:
1. How old are you? _______ Male Female

2. What is your gender?

3. Your income
4. What is the highest level of education you have achieved? Less than high school high school graduate college or higher.

Respond to each of 13 items using the scale:

1- Strongly disagree 2- Disagree 3- Neither agree nor disagree 4- Agree 5- Strongly agree

Q1: Is there a family member who has been identified as the next business leader?
1 2 3 4 5

Q2: Is there a plan or process in place to develop the next generation?

1 2 3 4 5

Q3: Dose your business have a written strategic plan?

1 2 3 4 5

Q4: Is there agreement about the possibility of extending ownership to family?

1 2 3 4 5

non-

Q5: What stage are you at in your business?

Beginning Growing Going

Q6: Do you have a detailed plan for the future growth of your business?
1 2 3 4 5

Q7: When do you consider growth planning to be important to your business?

Now <1 year 1-5 year >5 year

Q8: Which of the following barriers prevent you from developing and achieving your growth and succession goals?
Time. Understanding of needs. Cost Advice and Support Other

Limited Knowledge.

Q9: Do you know how much your business is worth today? And what it will be worth in the future?
1 2 3 4 5 .

Q10: Are you interested in buying a similar business?

1 2 3 4 5

Q11: Do you have enough capital to grow your business?

1 2 3 4 5

Q12: Are you interested in your management and staff Investing In the business?
1 2 3 4 5

Q13: Is there a potential family successor?

1 2 3 4 5