The Design and Use of Management Accounting and Control Systems in Saudi Arabian Family Businesses: A Weberian Perspective of Accounting
The study focuses on how management accounting and control systems (MACS) are designed and used in four non-listed family businesses (FBs) in developing countries context i.e. Saudi Arabia. Drawing upon Weber’s work (1947, 1968, 1978) on ‘rational capital accounting’, ‘bureaucracy’ and ‘traditional society’ and Weberian framework of accounting developed by Colignon and Covaleski (1991), this study critically analyses the nature and forms of MACS in Saudi FBs and how rational (formal controls) are implemented through informal processes in a way that serves the substantive rationality of family owners i.e. Socio-emotional wealth (SEW). Methodologically, a case study design was adopted in this research involving four FBs. Data was gathered by means of semi-structured interviews (with various organisational members at different managerial levels), documents analysis, and observations. The external layer of analysis of the structural, historical, economic and political conditions of Saudi Arabia highlights the tension between tradition and modernity, and identifies how elements of traditionalism such as personal loyalty, obedience, family domination and kinship influence how FBs are managed and controlled. The internal layer of analysis reveals how the use of rational (formal) controls (e.g. cybernetic controls, reward and compensation controls, and administrative controls) and legal/accounting rules are appropriated or re-interpreted to serve the family’s substantive maintenance of dominant control. The domination by family owners is exercised and materialised through the use of the Diwan as an informal arena for exchanging accounting and performance information and for decision-making, reflective of the nature of ‘Sheikocratic’ culture and the cultural practices of Assabiya and Wasta. The study is motivated by the dearth of literature on MACS in FBs operates in the Arab world i.e. Saudi Arabia. The complexity and interactions between the family and business pinpoint the tension between the rationalities of different social groups with different interests. In the absence of a detailed understanding of the interactions and use of MACS, the study contributes to the literature in developing countries context by offering a better understanding of how and why MACS is designed and used in Saudi FBs. Theoretically, the interacting analysis of external and internal layers provides further insights on expanding Weber’s theorisation of ‘rationalities’ and ‘domination’. In particular, it brings to the fore how social groups leverage an ‘informal arena of organisational coalition’ to maintain and extend dominance on FBs control, strategies and activities.
H Social Sciences (General), HF Commerce, HF5601 Accounting
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