Formal accounting planning in SMEs: The influence of family ownership and entrepreneurial orientation

Abstract

Purpose

Several studies have highlighted the importance of management accounting practices such as formal short-term planning and formal long-term planning for SME performance. However, few studies have considered what actually explains differences in the use of formal planning (from a management accounting approach) in SMEs. Family ownership and EO are two plausible explanations for such differences. The purpose of this paper is therefore to examine how family ownership and EO are correlated to the use of formal short-term planning and formal long-term planning in SMEs.

Design/methodology/approach

In this study, the authors examined how family ownership and entrepreneurial orientation (EO) affect the use of formal planning by analyzing a sample of 156 Swedish manufacturing SMEs, using multivariate regression analysis.

Findings

As could be expected, the authors were able to validate the notion that family firms use less formal planning than non-family firms. However, in contrast to some previous studies, the authors found that there is a strongly positive relationship between EO and the use of formal short-term planning and long-term planning.

Originality/value

Whereas many previous studies on family business have assumed that family firms use less formal planning than non-family firms, the present study is one of few to actually confirm this notion. Also, this study has provided strong evidence that EO is positively correlated to the use of formal planning, in the short term and in the longer term.

Citation

Samuelsson, J., Andersén, J., Ljungkvist, T. and Jansson, C. (2016), "Formal accounting planning in SMEs: The influence of family ownership and entrepreneurial orientation", Journal of Small Business and Enterprise Development, Vol. 23 No. 3, pp. 691-702. https://doi.org/10.1108/JSBED-12-2015-0167