Management accounting in the family business: tipping the balance for survival

Abstract

Purpose – This article presents the family business-specific benefits of taking a proactive approach to using management accounting practices and information. Design/methodology/approach – The (scarce) literature on management accounting in family businesses is used to discuss the obstacles and benefits of management accounting in family businesses. The benefits are presented using the three-circle model, which displays the family business system consisting of the three subsystems ownership, business and family. Findings – For family businesses, the main benefits of (increasingly) using management accounting should lie in codifying tacit knowledge, preparing for family and non-family succession, facilitating more fact-based decision-making and alleviating the production of proper information of non-family investors and creditors. Practical implications – Family business owners, as well as non-family managers in family businesses, might find helpful food for thought regarding how to establish or develop further the management accounting system in a family business. Originality/value – This article is among the first to discuss the benefits of management accounting for family businesses.