Description or Abstract

This study investigates the financial behavior of family businesses in the Arab world through an institutional perspective. While previous research has extensively examined financial decision-making in family firms, existing insights remain largely centered on Western contexts and overlook the influence of the institutional, cultural, and religious environment specific to Arab economies. Addressing this gap, the study explores the following question: What institutional and contextual factors shape the financial behavior of Arab family businesses? Drawing on institutional theory, the research examines how formal institutions—such as legal frameworks, regulatory systems, and financial market structures—and informal institutions— such as family dynamics, cultural norms, and religious beliefs—interact to influence financial decisions. The empirical investigation employs a qualitative approach based on semi-structured interviews with family business owners, financial executives, and consultants from different Arab countries. A purposive sampling strategy ensured diversity of perspectives across sectors and national contexts. Thematic analysis was conducted to identify and categorize the institutional forces shaping financial behavior. The findings reveal three dominant institutional influences. First, macroeconomic and formal pressures—including political connections, regulatory uncertainty, and limited availability of financial instruments—significantly affect financing decisions. Second, informal institutions, such as patriarchal governance structures, socioemotional wealth priorities, and cultural risk aversion, lead to conservative financial strategies and frequent overlap between family and business finances. Third, religion operates as a strong normative force, with Islamic finance principles shaping preferences for Sharia-compliant instruments and discouraging the use of interest-bearing debt. The study contributes to the literature by extending institutional theory to the context of Arab family firms and demonstrating how formal and informal institutions jointly mold financial behavior within a complex institutional environment. It provides empirical evidence from a region that remains underrepresented in family business research. Practically, the findings highlight the need for policymakers and financial institutions to design regulatory frameworks and financial products that align with cultural and religious norms, while encouraging family firms to adopt governance mechanisms that reconcile tradition with contemporary financial practices. The study concludes by emphasizing the importance of context-sensitive approaches to understanding financial decision-making in Arab family businesses. It calls for future research and longitudinal methods to capture the evolving institutional landscape and its implications for financial behavior over time.

Department

Center for Entrepreneurship & Innovation

Program

MENA Family Business Research Conference

Performance Date

2025-10-25

Content Type

Conference Proceeding

File Type

Transcript

Language

eng

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Included in

Business Commons

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