The management accounting system design in family firms: the role of leadership and entrepreneurial orientation

Purpose: This study aims to examine how the choice of chief executive officers (CEOs) and the strategic orientation influence the design of management accounting systems (MASs) in small- and medium-sized enterprises (SMEs) family firms. Specifically, the authors seek to examine the extent to which the leadership of nonfamily CEO and entrepreneurial orientation toward internationalization can explain the sophistication level of MAS. The study also investigates the indirect effect of MAS sophistication on the economic performance of SME family firms. Design/methodology/approach: Drawing on upper echelon theory and the strategic management of family business literature, this study predicts the influence of nonfamily CEOs and international entrepreneurship on MAS sophistication. Survey data from 344 family firms were analyzed using multivariate statistical methods to test the hypotheses. Findings: This study found empirical support for a positive influence of nonfamily CEO and international entrepreneurship on the level of MAS sophistication. Furthermore, the authors observed that the impact of appointing a nonfamily CEO on financial performance is contingent upon the implementation of a sophisticated MAS. However, the results did not support the hypothesized moderating effect of MAS sophistication on the relationship between international entrepreneurship and financial performance. Originality/value: This paper provides empirical evidence on the impact of recruiting nonfamily CEOs and engaging in international entrepreneurship on MAS sophistication within SME family firms. Furthermore, the analysis confirms that the effect of appointing a nonfamily CEO on economic performance depends on the level of MAS sophistication.