Managerial Controls in Private Family Firms: The Influence of a Family’s Decision Premises

Daniel Magalhães Mucci, Ann Jorissen, Fabio Frezatti and Diógenes de Souza Bido
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Daniel Magalhães Mucci: Department of Accounting and Actuarial Sciences, University of São Paulo, São Paulo 05508-010, Brazil
Ann Jorissen: Department of Accounting and Finance, University of Antwerpen, 2000 Antwerpen, Belgium
Fabio Frezatti: Department of Accounting and Actuarial Sciences, University of São Paulo, São Paulo 05508-010, Brazil
Diógenes de Souza Bido: Department of Social and Applied Sciences, Mackenzie Presbyterian University, São Paulo 01302-907, Brazil

Sustainability, 2021, vol. 13, issue 4, 1-21

Abstract: In most studies, the affiliation of the manager (family-affiliated or non-family affiliated) and supposedly related behavior (agent or steward) is considered the sole antecedent to explain a family business’ (non) professionalization of managerial controls. This paper, based on Luhmann’s new system theory, examines whether a family’s decision premises influence the design of managerial controls in family firms in addition to a manager’s family affiliation status. Using survey data of 135 large and medium-sized Brazilian family firms and testing the hypotheses with SEM, this study provides evidence that a family’s decision premises significantly influence the design of managerial controls in family firms. This study provides evidence that when a family’s intention to transfer the firm to next generation (TGO) is high, more formal controls, as well as controls of a more participative nature are adopted in a family firm. Moreover, the results do not indicate that the level of family involvement in management affects the design of controls in firms with high TGO. The results only showed a significant relationship between a family’s intention to control and influence (FCI) the firm and the absence of participative controls. In addition, these findings also illustrate that each single family-induced decision premise has the potential to explain family firm behavior, since each of the two premises considered in our study is related to a different design of the controls adopted by the family firm.

Keywords: managerial controls; decision premises; system´s perspective; family involvement; professionalization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:4:p:2158-:d:500980

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