Institutionalisation of Management Accounting in Family Businesses — Empirical Evidence From Austria and Germany

Abstract

This study investigates whether family businesses (FBs) differ from non-family businesses (NFBs) regarding the institutionalisation of management accounting. Furthermore, it analyses whether FB-specific contextual factors such as the existence of non-family management and the level of family influence affect the establishment of discrete management accounting departments. Six hypotheses are formulated and tested based on survey results from 479 firms from Austria and 418 firms from Germany. Our results indicate that FBs establish fewer management accounting departments than NFBs do and that the heads of management accounting in FBs are less likely to hold a university degree compared with their counterparts in NFBs. Moreover, within FBs, larger firm size and the existence of non-family management are positively correlated with the establishment of management accounting departments, where firm size acts as the strongest predictor. As firm type (FB vs. NFB) emerged as a significant contextual factor for the institutionalisation of management accounting, this factor should be included in future studies of the organisation and set-up of the corporate management accounting function. Moreover, deeper investigation into the drivers and outcomes of FB-specific management accounting institutionalisation is needed.

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“…We interpret these results as family firms making the same structural decisions on accounting functions as non-family firms, except for smaller family firms. Professionalisation in accounting seems to be manifested not as much as in structures of an accounting function but probably more in the use of instruments (Quinn et al, 2018) or human capital of accounting staff (Hiebl et al, 2012). However, firm size seems to strongly constrain accounting practices (Chenhall, 2003) and implementation of professional accounting functions (Moores & Mula, 2000).…”

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“…Moreover, the controlling family may introduce incentives to align the non-family manager's behavior to the family's goals. These incentives typically build on management accounting information, and are only available if the management accounting system provides sufficient information (Hiebl et al, 2012). Again, the example may sound obvious, but this benefit is available only if the family chooses to provide the necessary information.…”