Professionalisation of Family Firms and Accounting Function: Empirical Evidence

• Authors: Robert Rieg , Justyna Dobroszek , Ewelina Zarzycka

Abstracts

EN

An increasing influence of families in firms is associated with lower professionalisation. A less professionalized firm might not be able to exploit the benefits of elaborate accounting functions that are fundamental for effective decision-making and control. Yet, it is unclear to date if higher family influence leads to less differentiated and professionalized accounting functions and hence less effective decision-making and control. We test this proposition based on survey data with Bayesian regressions and interaction effects. We find evidence that the impact of family on professionalisation is particularly pronounced in smaller firms, and the effect decreases with the firm's size. This indicates that family influence and professionalisation have more significant impact on the use of accounting instruments and less impact on the differentiaiton of accounting functions, except for smaller family firms.

Keywords

EN

accounting function; empirical evidence; family firms; financial accounting; management accounting

• Publisher: Uniwersytet Warszawski. Wydział Nauk Ekonomicznych
• Journal: Central European Economic Journal
• Year: 2022
• Volume: 9
• Issue: 56
• Pages: 113-131

Dates

published

2022

Contributors

author

Robert Rieg

• Aalen University, Faculty of Business, Aalen, Germany

• https://orcid.org/0000000224657176

author

Justyna Dobroszek

• University of Lodz, Faculty of Management, Lodz, Poland

• https://orcid.org/0000000347289019

author

Ewelina Zarzycka

• University of Lodz, Faculty of Management, Lodz, Poland

• https://orcid.org/0000000253472883

References

• Alattar, J. M., Kouhy, R., & Innes, J. (2009). Management accounting information in micro enterprises in Gaza. Journal of Accounting & Organizational Change, 5(1), 81–107. https://doi.org/10.1108/18325910910932223
• Allio, M. K. (2004). Family businesses: Their virtues, vices, and strategic path. Strategy & Leadership, 32(4), 24–33. https://doi.org/10.1108/10878570410576704
• Anderson, R. C., & Reeb, D. R. (2003). Founding family ownership and firm performance: Evidence from the S&P 500. The Journal of Finance, 58(3), 1301–1328. https://doi.org/10.1111/1540-6261.00567
• Bardhan, I., Lin, S., & Wu, S.-L. (2015). The quality of internal control over financial reporting in family firms. Accounting Horizons, 29(1), 41–60. https://doi.org/10.2308/acch-50935
• Beck, T., Demirgüc-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? The Journal of Finance, 60(1), 137–177. https://doi.org/10.1111/j.1540-6261.2005.00727.x
• Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2012). Socioemotional wealth in family firms. Family Business Review, 25(3), 258–279. https://doi.org/10.1177/0894486511435355
• Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less? Administrative Science Quarterly, 55(1), 82–113. https://doi.org/10.2189/asqu.2010.55.1.82
• Bloom, N., Genakos, C., Sadun, R., & van Reenen, J. (2012). Management practices across firms and countries. Academy of Management Perspectives, 26(1), 12–33. https://doi.org/10.5465/amp.2011.0077
• Bruque, S., & Moyano, J. (2007). Organizational determinants of information technology adoption and implementation in SMEs: The case of family and cooperative firms. Technovation, 27(5), 241–253. https://doi.org/10.1016/j.technovation.2006.12.003
• Buriachenko, A. Y., Zhyber, T. V., & Paientko, T. (2020). Managerial accounting in the implementation of deliverology using the example of Ukraine. Central European Economic Journal, 7(54), 72–83. https://doi.org/10.2478/ceej-2020-0003
• Caglio, A. (2003). Enterprise resource planning systems and accountants: Towards hybridization. European Accounting Review, 12(1), 123–153. https://doi.org/10.1080/0963818031000087853
• Camfield, C., & Franco, M. (2019). Theoretical framework for family firm management. Journal of Family Business Management, 9(2), 201–227. https://doi.org/10.1108/JFBM-06-2018-0020
• Carrera, N. (2017). What do we know about accounting in family firms? Journal of Evolutionary Studies in Business, 2(2), 97–159. https://doi.org/10.1344/jesb2017.2.j032
• Cassia, L., Paleari, S. & Redondi, R. (2005). Management accounting systems and organisational structure. Small Business Economics, 25(4), 373–391. https://doi.org/10.1007/s11187-004-6494-8
• Cesaroni, F. M., & Sentuti, A. (2016). Accountants’ role in the management of succession: Empirical evidence from Italy. Journal of Family Business Management, 6(3), 270–290. https://doi.org/10.1108/JFBM-08-2015-0028
• Chen, S., Chen, H., & Cheng, Q. (2008). Do family firms provide more or less voluntary disclosure? Journal of Accounting Research, 46(3), 499–536. https://doi.org/10.1111/j.1475-679X.2008.00288.x
• Chenhall, R. (2003). Management control systems design within its organizational context: Ffindings from contingency-based research and directions for the future. Accounting, Organizations and Society, 28(2–3), 127–168. https://doi.org/10.1016/S0361-3682(01)00027-7
• Chu, W. (2011). Family ownership and firm performance: Influence of family management, family control, and firm size. Asia Pacific Journal of Management, 28(4), 833–851. https://doi.org/10.1007/s10490-009-9180-1
• Cruz, I., Major, M., & Scapens, R. W. (2009). Institutionalization and practice variation in the management control of a global/local setting, Accounting, Auditing & Accountability Journal, 22(1), 91–117. https://doi.org/10.1108/09513570910923024
• Davila, T. (2005). An exploratory study on the emergence of management control systems: Formalizing human resources in small growing firms. Accounting, Organizations and Society, 30(3), 223–248. https://doi.org/10.1016/j.aos.2004.05.006
• Dawson, A., & Mussolino, D. (2014). Exploring what makes family firms different: Discrete or overlapping constructs in the literature? Journal of Family Business Strategy, 5(2), 169–183. https://doi.org/10.1016/j.jfbs.2013.11.004
• DeCoster, J., Gallucci, M., & Iselin, A. M. R. (2011). Best practices for using median splits, artificial categorization, and their continuous alternatives. Journal of Experimental Psychopathology, 2(2), 197–209. https://doi.org/10.5127/jep.008310
• Dekker, J. C., Lybaert, N., Steijvers, T., & Depaire, B. (2015). The effect of family business professionalization as a multidimensional construct on firm performance. Journal of Small Business Management, 53(2), 516–538. https://doi.org/10.1111/jsbm.12082
• Dekker, J. C., Lybaert, N., Steijvers, T., Depaire, B., & Mercken, R. (2013). Family firm types based on the professionalization construct. Family Business Review, 26(1), 81–99. https://doi.org/10.1177/0894486512445614
• Dewett, T., & Jones, G. R. (2001). The role of information technology in the organization: A review, model, and assessment. Journal of Management, 27, 313–346. https://doi.org/10.1177/014920630102700306
• Dienemann, S. & Stubner, S. (2014). The Familiness Concept in Family Firm Research - A Literature Review. Academy of Management Proceedings, 2014(1), 17002. https://doi.org/10.5465/ambpp.2014.17002abstract
• Doh, J. P., & Hahn, E. D. (2008). Using spatial methods in strategy research. Organizational Research Methods, 11(4), 659–681. https://doi.org/10.1177/1094428107300340
• Eierle, B. & Haller, A. (2009). Does size influence the suitability of the IFRS for small and medium-szed entities?: Empirical evidence from Germany. Accounting in Europe, 6(2), 195–230. https://doi.org/10.1080/17449480903115779
• Everaert, P., Sarens, G., & Rommel, J. (2010). Using transaction cost economics to explain outsourcing of accounting. Small Business Economics, 35(1), 93–112. https://doi.org/10.1007/s11187-008-9149-3
• Fanelli, D., & Ioannidis, J. P. (2013). US studies may overestimate effect sizes in softer research. Proceedings of the National Academy of Sciences, 110(37), 15031–15036. https://doi.org/10.1073/pnas.1302997110
• Fang, H., Memili, E., Chrisman, J. J., & Welsh, D. H. (2012). Family firms’ professionalization: Institutional theory and resource-based view perspectives. Small Business Institute Journal, 8(2), 12–34.
• Fleischman, G., Walker, K., & Johnson, E. (2010). A field study of user versus provider perceptions of management accounting system services. International Journal of Accounting & Information Management, 18(3), 252–285. https://doi.org/10.1108/18347641011068992
• Fox, A., Hannah, G., Helliar, C., & Veneziani, M. (2013). The costs and benefits of IFRS implementation in the UK and Italy. Journal of Applied Accounting Research, 14(1), 86–101. https://doi.org/10.1108/09675421311282568
• Frank, H., Kessler, A., Rusch, T., Suess–Reyes, J., & Weismeier–Sammer, D. (2017). Capturing the familiness of family businesses: Development of the family influence familiness scale (FIFS). Entrepreneurship Theory and Practice, 41(5), 709–742. https://doi.org/10.1111/etap.12229
• García Pérez de Lema, D., & Duréndez, A. (2007). Managerial behaviour of small and medium-sized family businesses: an empirical study. International Journal of Entrepreneurial Behavior & Research, 13(3), 151–172. https://doi.org/10.1108/13552550710751030
• Giovannoni, E., Maraghini, M. P., & Riccaboni, A. (2011). Transmitting knowledge across generations: The role of management accounting practices. Family Business Review, 24(2), 126–150. https://doi.org/10.1177/0894486511406722
• Gomez-Mejia, L. R., Cruz, C., Berrone, P., & Castro, J. de (2011). The bind that ties: Socioemotional wealth preservation in family firms. The Academy of Management Annals, 5(1), 653–707. https://doi.org/10.1177/0894486511406722
• Gomez-Mejia, L. R., Cruz, C., & Imperatore, C. (2014). Financial reporting and the protection of socioemotional wealth in family-controlled firms. European Accounting Review, 23(3), 387–402. https://doi.org/10.1080/09638180.2014.944420
• Gomez-Mejia, L. R., Haynes, K. T., Nunez-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52, 106–137. https://doi.org/10.2189/asqu.52.1.106
• Goretzki, L., Strauss, E., & Weber, J. (2013). An institutional perspective on the changes in management accountants’ professional role. Management Accounting Research, 24(1), 41–63. https://doi.org/10.1016/j.mar.2012.11.002
• Greco, G., Ferramosca, S., & Allegrini, M. (2015). The influence of family ownership on long-lived asset write-offs. Family Business Review, 28(4), 355–371. https://doi.org/10.1177/0894486515590017
• Hall, A., & Nordqvist, M. (2008). Professional management in family businesses: Toward an extended understanding. Family Business Review, 21(1), 51–69. https://doi.org/10.1111/j.1741-6248.2007.00109.x
• Hansen, C., Block, J., & Neuenkirch, M. (2020). Family firms performance over the business cycle: A meta-analysis. Journal of Economic Surveys, 34(3), 476–511. https://doi.org/10.1111/joes.12364
• Helsen, Z., Lybaert, N., Steijvers, T., Orens, R., & Dekker, J. C. (2017). Management control systems in family firms: A review of the literature and directions for the future. Journal of Economic Surveys, 31(2), 410–435. https://doi.org/10.1111/joes.12154
• Hemmer, T., & Labro, E. (2008). On the optimal relation between the properties of managerial and financial reporting systems. Journal of Accounting Research, 46(5), 1209–1240. https://doi.org/10.1111/j.1475-679X.2008.00303.x
• Herr, H., & Nettekovon, Z. M. (2017). The role of small and medium-sized enterprises in development. What can be learned from the German experience? ?, Global Labour University Working Paper, Retrieved December 20, 2021, from https://library.fes.de/pdf-files/iez/14056.pdf
• Hiebl, M. R. W. (2013). Management accounting in the family business: Tipping the balance for survival. Journal of Business Strategy, 34(6), 19–25. https://doi.org/10.1108/JBS-07-2013-0052
• Hiebl, M. R. W., Duller, C., Feldbauer-Durstmüller, B., & Ulrich, P. (2015). Family influence and management accounting usage: Findings from Germany and Austria. Schmalenbach Business Review, 67(3), 368–404. https://doi.org/10.1007/BF03396880
• Hiebl, M. R. W., Feldbauer-Durstmüller, B., & Duller, C. (2013). The changing role of management accounting in the transition from a family business to a non-family business. Journal of Accounting & Organizational Change, 9(2), 119–154. https://doi.org/10.1108/18325911311325933
• Hiebl, M. R. W., Feldbauer-Durstmüller, B., Duller, C., & Neubauer, H. (2012). Institutionalization of management accounting in family businesses: Empirical evidence from Austria and Germany. Journal of Enterprising Culture, 20(4), 405–436. https://doi.org/10.1142/S0218495812500173
• Hiebl, M. R. W., & Mayrleitner, B. (2019). Professionalization of management accounting in family firms: The impact of family members. Review of Managerial Science, 13(5), 1037–1068. https://doi.org/10.1007/s11846-017-0274-8
• Hoffman, M. D., & Gelman, A. (2014). The no-u-turn sampler: Adaptively setting path lengths in Hamiltonian Monte Carlo. Journal of Machine Learning Research, 15, 1593–1623.
• Hulland, J., Baumgartner, H., & Smith, K. M. (2018). Marketing survey research best practices: Evidence and recommendations from a review of JAMS articles. Journal of the Academy of Marketing Science, 46(1) 92–108. https://doi.org/10.1007/s11747-017-0532-y
• Ikäheimo, S., & Taipaleenmäki, J. (2010). The divergence and convergence of financial accounting and management accounting: Institutional analysis of the U.S., Germany and Finland, Die Betriebswirtschaft, 70(4), 349–368.
• Ioannidis, J. P. (2005). Why most published research findings are false. PLoS Medicine, 2(8), e124. https://doi.org/10.1371/journal.pmed.0020124
• Kallunki, J. P., Laitinen, E. K., & Silvola, H. (2011). Impact of enterprise resource planning systems on management control systems and firm performance. International Journal of Accounting Information Systems, 12(1), 20–39. https://doi.org/10.1016/j.accinf.2010.02.001
• Klein, S. B., Astrachan, J. H., & Smyrnios, K. X. (2005). The F–PEC scale of family influence: Construction, validation, and further implication for theory. Entrepreneurship Theory and Practice, 29(3), 321–339. https://doi.org/10.1111/j.1540-6520.2005.00086.x
• Kruschke, J. K. (2015), Doing Bayesian data analysis: A tutorial with R JAGS and Stan (2nd ed.). AP Academic Press/Elsevier, Amsterdam.
• Kruschke, J. K., & Liddell, T. M. (2018). The Bayesian new statistics: Hypothesis testing, estimation, meta-analysis, and power analysis from a Bayesian perspective. Psychonomic Bulletin & Review, 25(1), 178–206. https://doi.org/10.3758/s13423-016-1221-4
• Le Breton-Miller, I., & Miller, D. (2009). Agency vs. stewardship in public family firms: A social embeddedness reconciliation. Entrepreneurship Theory and Practice, 33(6), 1169–1191. https://doi.org/10.1111/j.1540-6520.2009.00339.x
• Levitt, B., & March, J. G. (1988). Organizational learning. Annual Review of Sociology, 14, 319–340. https://doi.org/10.1146/annurev.so.14.080188.001535
• Loeys, T., Moerkerke, B., Smet, O. de, & Buysse, A. (2012). The analysis of zero-inflated count data: Beyond zero-inflated Poisson regression. The British journal of Mathematical and Statistical Psychology, 65(1), 163–180. https://doi.org/10.1111/j.2044-8317.2011.02031.x
• Lopez, P., & Hiebl, M. R. W. (2015). Management accounting in small and medium-sized enterprises: Current knowledge and avenues for further research. Journal of Management Accounting Research, 27(1), 81–119. https://doi.org/10.2308/jmar-50915
• Lubatkin, M. H., Schulze, W. S., Ling, Y., & Dino, R. N. (2005). The effects of parental altruism on the governance of family managed firms. Journal of Organizational Behavior, 26(3), 313–330. https://doi.org/10.1002/job.307
• Lubatkin, M. H., Simsek, Z., Ling, Y., & Veiga, J. F. (2006). Ambidexterity and performance in small-to medium-sized firms: The pivotal role of top management team behavioral integration. Journal of Management, 32(5), 646–672.
• Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance, 12(2), 321–341. https://doi.org/10.1016/j.jcorpfin.2005.02.002
• Moores, K., & Mula, J. (2000). The salience of market, bureaucratic, and clan controls in the management of family firm transitions: Some tentative Australian evidence. Family Business Review, 13(2), 91–106. https://doi.org/10.1111/j.1741-6248.2000.00091.x
• Moores, K., & Yuen, S. (2001). Management accounting systems and organizational configuration: A life-cycle perspective. Accounting, Organizations and Society, 26(4–5), 351–389. https://doi.org/10.1016/S0361-3682(00)00040-4
• Nandan, R. (2010). Management accounting needs of SMEs and the role of professional accountants: A renewed research Agenda. Journal of Applied Management Accounting Research, 8(1), 65–77.
• Neubauer, H., Mayr, S., Feldbauer-Durstmüller, B., & Duller, C. (2012). Management accounting systems and institutionalization in medium-sized and large family businesses: Empirical evidence from Germany and Austria. European Journal of Management, 12(2), 41–60.
• Oliveira, J. L. de, Miranda, S. R., & Mendes-da-Silva, W. (2017). The process of professionalization and governance in long lived family-owned companies: Advances and challenges. Revista ESPACIOS, 38(13), 4–17.
• Osborne, J. W. (2013). Best practices in data cleaning: A complete guide to everything you need to do before and after collecting your data. SAGE, Los Angeles.
• Pimentel, D., Scholten, M., & Couto, J. P. (2018). Fast or slow? Decision-making styles in small family and nonfamily firms. Journal of Family Business Management, 8(2), 113–125. https://doi.org/10.1108/JFBM-02-2017-0007
• Polat, G. (2021). Advancing the multidimensional approach to family business professionalization. Journal of Family Business Management, 11(4), 555–571. https://doi.org/10.1108/JFBM-03-2020-0020
• Poutziouris, P., Savva, C. S., & Hadjielias, E. (2015). Family involvement and firm performance: Evidence from UK listed firms. Journal of Family Business Strategy, 6(1), 14–32. https://doi.org/10.1016/j.jfbs.2014.12.001
• Prencipe, A., Bar-Yosef, S., & Dekker, H. C. (2014). Accounting research in family firms: Theoretical and empirical challenges. European Accounting Review, 23(3), 361–385. https://doi.org/10.1080/09638180.2014.895621
• Quinn, M., Hiebl, M. R. W., Moores, K., & Craig, J. B. (2018). Future research on management accounting and control in family firms: Suggestions linked to architecture, governance, entrepreneurship and stewardship. Journal of Management Control, 28, 529–546. https://doi.org/10.1007/s00187-018-0257-1
• Rau, S. B., Astrachan, J. H., & Smyrnios, K. X. (2018). The F-PEC Revisited: From the Family Business Definition Dilemma to Foundation of Theory. Family Business Review, 31(2), 200–213. https://doi.org/10.1177/0894486518778172
• Rieg, R., Zarzycka, E., & Dobroszek, J. (2021). Determinants of separating management accounting from financial accounting in SMEs and family firms: Evidence from Poland and Germany. Journal of East European Management Studies, 26(2), 214–242. https://doi.org/10.5771/0949-6181-2021-2
• Rizza, C., & Ruggeri, D. (2018). The institutionalization of management accounting tools in family firms: The relevance of multiple logics. Journal of Management Control, 28(4), 503–528. https://doi.org/10.1007/s00187-018-0256-2
• Roever, C. (2018). Bayesian random-effects meta-analysis using the bayesmeta R package. Journal of Statistical Software, 93(6), 1–51. https://10.18637/jss.v093.i06
• Salvato, C., & Moores, K. (2010). Research on accounting in family firms: Past accomplishments and future challenges. Family Business Review, 23(3), 193–215. https://doi.org/10.1177/0894486510375069
• Sharma, P., Chrisman, J. J., & Chua, J. H. (1997). Strategic management of the family business: Past research and future challenges. Family Business Review, 10(1), 1–35. https://doi.org/10.1111/j.1741-6248.1997.00001.x
• Songini, L., & Gnan, L. (2015). Family involvement and agency cost control mechanisms in family small and medium-sized enterprises. Journal of Small Business Management, 53(3), 748–779. https://doi.org/10.1111/jsbm.12085
• Songini, L., Gnan, L., & Malmi, T. (2013). The role and impact of accounting in family business, Journal of Family Business Strategy, 4(2), 71–83. https://doi.org/10.1016/j.jfbs.2013.04.002
• Songini, L., Morelli, C. and Vola, P. (2018). Managerial control systems in family business: State of the art. In J. Epstein, F. Verbeeten, & S. K. Widener (Eds.), Performance Measurement and Management Control: The Relevance of Performance Measurement and Management Control Research. (pp. 193–220). Emerald Publishing Limited.
• Speckbacher, G., & Wentges, P. (2012). The impact of family control on the use of performance measures in strategic target setting and incentive compensation: A research note. Management Accounting Research, 23(1), 31–46. https://doi.org/10.1016/j.mar.2011.06.002
• Stewart, A., & Hitt, M. A. (2012). Why can’t a family business be more like a nonfamily business? Family Business Review, 25(1), 58–86. https://doi.org/10.1177/0894486511421665
• Taipaleenmäki, J., & Ikäheimo, S. (2013). On the convergence of management accounting and financial accounting: The role of information technology in accounting change. International Journal of Accounting Information Systems, 14(4), 321–348. https://doi.org/10.1016/j.accinf.2013.09.003
• Vehtari, A., Gelman, A., & Gabry, J. (2017). Practical Bayesian model evaluation using leave-one-out cross-validation and WAIC. Statistics and Computing, 27(5), 1413–1432. https://doi.org/10.1007/s11222-016-9696-4
• Wagner, D., Block, J. H., Miller, D., Schwens, C., & Xi, G. (2015). A meta-analysis of the financial performance of family firms: Another attempt. Journal of Family Business Strategy, 6(1), 3–13. https://doi.org/10.1016/j.jfbs.2015.01.001
• Wasserstein, R. L., & Lazar, N. A. (2016). The ASA's statement on p-values: Context, process, and purpose. The American Statistician, 70(2), 129–133. https://doi.org/10.1080/00031305.2016.1154108
• Wasserstein, R. L., Schirm, A. L., & Lazar, N. A. (2019). Moving to a world beyond “p < 0.05.” The American Statistician, 73, sup1, 1–19. https://doi.org/10.1080/00031305.2019.1583913
• Weißenberger, B. E., & Angelkort, H. (2011). Integration of financial and management accounting systems: The mediating influence of a consistent financial language on controllership effectiveness. Management Accounting Research, 22(3), 160–180. https://doi.org/10.1016/j.mar.2011.03.003
• Williams, J. J., & Seaman, A. E. (2001). Predicting change in management accounting systems: national culture and industry effects. Accounting, Organizations and Society, 26(4–5), 443–460. https://doi.org/10.1016/S0361-3682(01)00002-2
• Zammuto, R. F., Griffith, T. L., Majchrzak, A., Dougherty, D. J., & Faraj, S. (2007). Information technology and the changing fabric of organization. Organization Science, 18(5), 749–762. https://doi.org/10.1287/orsc.1070.0307

Identifiers

DOI

10.2478/ceej-2022-0008

Biblioteka Nauki

2076912