The changing role of management accounting in the transition from a family business to a non‐family business

Abstract

The purpose of the present paper is to investigate whether the transition from a family business to a non-family business affects the institutionalisation of management accounting. Design/methodology/approach: This paper is based on an online survey among all large and medium-sized Austrian firms. Univariate and multivariate statistical analyses were used to test the impact of the level of family influence on aspects of the institutionalisation of management accounting. Firm size is included as the main control variable. Findings: A lower level of influence from the controlling family was found to be correlated with the institutionalisation and intensification of management accounting in medium-sized firms. For large firms, such a linear relationship could not be drawn. The level of education of management accountants was inversely correlated with the level of family influence in both large and medium-sized firms. Research limitations/implications: Further research into the reasons, underlying drivers and inter-organisational promoters of management accounting change in family businesses is needed. Furthermore, the organisational impacts of the transition from family businesses to non-family businesses deserve further investigation. Originality/value: A framework for assessing the organisational effects of the transition from family businesses to non-family businesses is provided. The empirical results on the impact of the transition on the institutionalisation of management accounting are presented. The level of family influence was found to act as a significant contextual factor for the organisation of management accounting in medium-sized firms.

Management control packages in family businesses: a configurational approach

“…10 For example, García Pérez de Lema and Duréndez (2007) show that FBs establish fewer business monitoring processes, such as cash budgets and planning decision-making processes, than NFBs. Hiebl et al (2013) find that medium-sized FBs with high family influence adopt fewer operational planning instruments and strategic MA instruments. However, the adoption of fewer MA practices does not inevitably lead to inferior efficiency in FBs (Daily and Dollinger 1992;Speckbacher and Wentges 2012).…”

“…Operational and strategically oriented MA practices are assumed to be complements rather than substitutes because operational MA practices are adopted in firms earlier than strategically oriented MA practices (Hiebl et al 2013). Several studies have reported that FBs adopt fewer operational and strategically oriented MA practices than non-FBs (NFBs) (e.g., Daily and Dollinger 1992;García Pérez de Lema and Duréndez 2007;Speckbacher and Wentges 2012;Hiebl et al 2013;Hiebl et al 2015;Senftlechner and Hiebl 2015) because, given the shared commitment among family members and nonfamily employees with empowerment and involvement, traditional agency problems, 9 such as moral hazards through information asymmetry, arise only rarely. 10 For example, García Pérez de Lema and Duréndez (2007) show that FBs establish fewer business monitoring processes, such as cash budgets and planning decision-making processes, than NFBs.…”

“…During the first stage of the analysis, we investigate the MC package of operational and strategically oriented MA practices, the interactive and diagnostic use of PMs, and cultural controls as the key variables characterizing the control configurations in FBs. In addition, we include the contextual factor of firm size, which influences the adoption of MA practices (Hiebl et al 2013), the use of PMs, and the emphasis on cultural controls. Our selection of variables is informed by previous research.…”

“…In our study, we define MA practices as operational (e.g., cost type accounting and cost center accounting) and strategically oriented (e.g., strategic and business planning) tools that can provide management with the information necessary to better plan and assess actions, subsequently anticipate the future, and support decision making (Roberts and Scapens 1985;Chenhall 2003). The distinction between operational and strategically oriented MA practices is relevant because smaller family businesses (FBs) tend to adopt more operational MA practices, whereas larger FBs tend to adopt more strategically oriented MA practices (see Hiebl et al 2013). In contrast, MCs such as cultural controls are not used primarily as an information system to support decisions but to ensure that employee behavior is in accordance with the organization's goals (Simons 1995;Malmi and Brown 2008;Merchant and Van der Stede 2017).…”

“…For example, as a set-theoretic method, QCA enables the investigation of asymmetry and, thus, allows for a separate analysis of high and low firm performance configurations, enabling deeper insights (Ragin 2000;Schneider and Wagemann 2012;Bedford and Sandelin 2015). Our theoretical arguments are tested on a cross-sectional sample of 66 FBs by considering configurations of different MA practices, two types of use, and cultural controls with firm size as a crucial contextual factor (Hiebl et al 2013).…”