Do We Need to Use an Accountant? The Sales Growth and Survival Benefits to Family SMEs

Abstract

This article explores the relationship between the usage of an external accountant and family firm sales growth and survival. Using a longitudinal panel of Australian small and medium sized family enterprises, we find that external accountants have a positive impact on sales growth and survival. We also find that the degree to which the accountant is acquainted with the family and the firm's needs, which we term as embeddedness, moderates these positive outcomes. Furthermore, we find that appropriate strategic planning processes are necessary to maximize the sales growth benefit; however, these processes are not necessary to gain the survival benefit.

All in the Family? An Exploratory Study of Family Member Advisors and Firm Performance

“…Gedajlovic et al (2004), for example, refer to crossing the threshold from founder management to professional management to gain competitive advantage, thus showing the need and willingness to rely on external advisors that, to different degrees, may be embedded into the family business (Barbera & Hasso, 2013).…”

“…For instance, because the effectiveness of family member advisors may be dependent on their experience inside and outside the family business, future research could consider human capital as a proxy for the quality of advice that may positively affect performance (Barbera & Hasso, 2013;Sirmon & Hitt, 2003). Family member advisors' effectiveness may also depend on the fact that family firms simultaneously have economic and non-economic goals, as has been suggested (see, for example, the concept of socioemotional wealth, by Gómez-Mejía, Haynes, Núñez -Nichel, Jacobson, & Moyano-Fuentes, 2007).…”

“…With relatively few people involved in first generation family firms, agency costs resulting from information asymmetries tend to be lower. Yet, a business that is small, young, and has low product diversification needs the insights and knowledge of multiple family members, especially professional family member advisors, to thrive and grow (Churchill & Lewis, 1983;Gedajlovic, Lubatkin, & Schulze, 2004;Kellermanns & Eddleston, 2004;Greiner, 1972), as family members are usually acknowledged as holders of firm-specific tacit knowledge (Barbera & Hasso, 2013). Knowledge ranging from production efficiency to financial control is needed, and in addition, "the founders often hate to step aside" even if they lack knowledge in important areas (Greiner, 1972(Greiner, /1997 and are reluctant to rely on professional management (Hall & Nordqvist, 2008).…”

Social identity theory and the family business

“…Having the non-family TMT-member adhere to their group prototype could also be a way for the owner family to align him or her with the family ways and values. This strategy partly reflects the notion of Barbera and Hasso (2013), who talk about the importance of non-family employees being embedded in the company and the family. Hence, SIT could be a fruitful approach for understanding the socialisation of non-family managers in both business and family.…”

Advising Family Enterprise

“…The Growth and Survival Benefits to Family SMEs," Barbera and Hasso (2013) investigate whether the use of an external accountant in family small-and medium-sized enterprises (less than 200 employees) increases the likelihood of firm sales growth and survivability, and if external accountants are used, whether strategic planning processes increase the likelihood of firm sales growth and survivability. This article builds on growing interest in the nature of accounting in family firms (Salvato & Moores, 2010).…”