Introduction of accounting practices in small family businesses

Abstract

Purpose

This research investigates the introduction of accounting practices into small family businesses, based on socioemotional wealth theory.

Design/methodology/approach

A multiple-case study was conducted gathering data through interviews and documents (proprietary and public). The sample included six businesses (five Mexican and one American) from different manufacturing and service industries.

Findings

It was found that, although owners control the implementation of accounting practices, others (including family employees, non-family employees and external experts) at times propose practices. The owner’s control can be relaxed, or even eliminated, as the result of proposals from some family employees. However, the degree of influence of family employees is not linked to the closeness of the family relationship, but rather to the owners’ perceived competence of the family employee, indicating an interaction between competence and experience on one side, and family ties on the other.

Research limitations/implications

First, the owners chose which documentary data to provide and who was accessible for interviews, potentially biasing findings. Second, the degree of influence family employees can exert might change over time. Third, the study included a limited number of interviews, which can increase the risk of bias. Finally, all firms studied were still managed by the founder. It is possible that small family businesses that have undergone a succession process might incorporate accounting practices differently.

Practical implications

Organizations promoting the implementation of managerial accounting practices should be aware that, in addition to the owner, some family employees and external experts could influence business practices. Accountants already providing accounting services to small family business are also a good source for proposing managerial accounting practices

Originality/value

This study contributes to theory in four ways. First, it expands socioemotional theory to include the perceived competence of the family employee as a potential moderator in the decision-making process. Second, it categorizes the actors who can influence managerial accounting practices in small family businesses. Third, it further refines the role of these actors, based on their degree of influence. Fourth, it proposes a model that describes the introduction of managerial accounting practices in small family business.

Citation

Huerta, E., Petrides, Y. and O’Shaughnessy, D. (2017), "Introduction of accounting practices in small family businesses", Qualitative Research in Accounting & Management, Vol. 14 No. 2, pp. 111-136. https://doi.org/10.1108/QRAM-01-2015-0008