Högskolan i Skövde

Purpose The purpose of this study is to critically analyze the assertion that there is a statistical significant relationship between EO and performance. Design In several publications it has been stated that there is a positive relationship between entrepreneurial orientation (EO) and the performance of a firm. These studies have generally used the same core references, and these seminal contributions are examined critically in this article. The EO-performance relationship is also analyzed in an empirical study, consisting of 172 Swedish SMEs in the manufacturing sector. Findings The result of the literature review is that the notion of a positive EO-performance relationship can be questioned. Earlier studies have neglected some important issues, mainly regarding the use of perceptual performance data, common method biases and survival biases. Some of the conclusions presented are supported by the empirical study. Originality/value The main point of this paper is to show that the relationship between EO and performance is more complicated than previous studies have implied. More care should be taken when generalizing the results of core references and scholars ought to have a more cautious approach when stating that there is a general correlation between EO and performance.

The aim of this article is to provide a holistic framework for the acquisition of strategic resources. Design/methodology/approach – The literature dealing with resource creation is reviewed and analyzed from a resource-based point of view. The major methods of acquiring resources are identified through the literature review and the applicability of the framework proposed is illustrated with an empirical example. Findings – Three ways of acquiring strategic resources are identified – direct investments, organizational processes, and product market positioning. All three ways of acquisition can be intentional or unintentional. Arguments for using this six-dimension scale are provided through deductive reasoning, literature review, and the empirical example. Research implications/limitations – The study identifies the six dimensions of strategic resource acquisition. However, integration of these dimensions is not a subject addressed in this study. Cluster analysis of companies according to these dimensions could enhance our understanding of the characteristics of companies regarding resource acquisition. Originality/value – Whereas previous studies have generally used a single-theory approach, this study highlights the importance of having a holistic outlook when analyzing resource-based competitive advantages.

The resource-based view (RBV) of the firm has been used to examine the role of resources and capabilities in product innovation and how product innovation is related to overall firm performance. Moreover, the natural RBV (NRBV) has addressed how resources affect the natural environment, whereas the relational RBV has highlighted the importance of relational resources, that is, resources shared with stakeholders outside the focal firm. In order to consider these extensions of the RBV in product innovation, this article applies a relational NRBV (RNRBV) on product innovation. Using data from 305 Swedish small manufacturing firms, structural equation modeling is used to examine the relationships between green product innovation (GPI), differentiation advantage and firm performance, and how these relationships are influenced by a relational resource in terms of green suppliers. The results demonstrate that GPI affects differentiation advantage and that this relationship is strengthened by having green suppliers. The article offers a RNRBV on product innovation and illustrates the importance of incorporating additional dependent variables other than aggregated performance measures when researching GPI. Moreover, the study shows that green suppliers can provide important products and complementary resources in order for the focal firm to fully realize its GPI capability.

Purpose – The purpose of this paper is to develop a contemporary resource-based taxonomy of manufacturing micro, small, and medium-sized enterprises (MSMEs) and to relate the findings to other small to medium-sized enterprise (SME) taxonomies and to resource-based theory.

Design/methodology/approach – Cluster analysis of 186 Swedish manufacturing MSMEs. The cluster analysis is based on resources and capabilities. The cluster variables were identified through case studies and a literature review of contemporary studies in resource-based theory.

Findings – The cluster analysis resulted in identification of six different clusters: Ikeas, conservatives, technocrats, marketeers, craftsmen, and nomads. The results are related to other SME taxonomies and the usefulness of going beyond the one-dimensional scale of entrepreneurs and non-entrepreneurs is discussed.

Originality/value – Classifications of firms, for example the Miles and Snow typology, have been used successfully in numerous studies. Also, the resource-based view of the firm has had a great impact on business research and there has been increasing interest in MSMEs. However, there are very few contemporary resource-based taxonomies of MSMEs.

Green product innovation (GPI) is a cornerstone of environmental management. Recent reviews on GPI have shown that research on GPI antecedents has mainly focused on identifying specific factors influencing the use of GPI. However, most studies lack a comprehensive theoretical explanation of the findings. In this study, which is based on a sample of 303 Swedish small manufacturing firms, antecedents to GPI are examined using the attention-based view of the firm. Two attentional perspectives, namely entrepreneurial orientation and environmental sustainability orientation, were found to positively influence the use of GPI. Moreover, situated attention, in terms of competitive intensity, strengthens the relationship between entrepreneurial orientation and GPI. The study highlights the usefulness of an attention-based view on GPI and environmental management in small firms.

Resource orchestration (RO) is a strategic management framework that details various processes by which how firms structure, bundle, and leverage resources. This study reviews how RO has been considered in environmental management research.The review highlights some limitations on how RO has been used in studies on environmental management, and it also illustrates a lack of knowledge accumulation in the field. To realize the full potential of RO, the concept of green RO is developed. Green RO (GRO) is defined as a firm's capability to coordinate and manage the structuring of resources and the bundling and leveraging of capabilities to create economicvalue for the company while simultaneously creating environmental benefits. Three main research areas for GRO are described: GRO as an organizational or managerial meta-capability, management of specific GRO processes, and the synchronization ofseveral GRO processes.

Research in competitiveness generally focuses on how competitive advantages can be developed. This is an important area of research, but as a consequence the process of imitation of competitive advantages has become a neglected area of research.

A conceptual sequential model for the imitation of competitive advantages is presented. The model mainly draws on resource-based theory, provides a holistic view of the imitation process, identifies different hindrances to imitation of competitive advantages, and presents arguments for the scheme chosen.

Purpose – In order to understand the pros and cons of an open organization regarding the flow of knowledge between firms, this paper introduces the concept of “protective capacity”. The purpose of the paper is to elaborate the concept of “protective capacity” especially in relation to absorptive capacity, by presenting a number of propositions.

Design/methodology/approach – Literature on mainly interfirm relationships, absorptive capacity and resources-based theory are reviewed and combined.

Findings – Protective capacity is defined as the “capacity to sustain, or to reduce the speed of depreciation of knowledge-based resources by preventing knowledge from being identified, imitated, and/or acquired by direct or indirect competitors”. Owing to the strong moderating factor of organizational openness, it is argued that protective capacity is inversely related to absorptive capacity. A number of propositions that can explain and moderate the inverse relationship between protective capacity and absorptive capacity are elaborated and discussed. These propositions concern organizational openness, knowledge management practices, realized and potential absorptive capacity, and dyadic relationships.

Originality/value – Acquiring external knowledge is a key feature of knowledge management. In order for a firm to absorb external knowledge, it is generally argued that it has to be open towards the environment. However, according to resource-based theory, firms have to safeguard their knowledge by, for example, having a secluded organization, thereby enhancing the uncertainty associated with tacit knowledge in order to sustain their competitive advantages. Whereas numerous studies have discussed the capacity to absorb knowledge, few studies have analyzed the capacity to protect knowledge.

Firm-specific human capital (HC) is widely recognised as the most important resource for superior firm performance. Contemporary literature on the resource-based view (RBV) and resource orchestration has stressed the importance of organising resources, such as firmspecific HC, in order to fully exploit them. However, companies with idiosyncratic resources cannot rely on established resource exploitation practices, making the exploitation of firmspecific HC a complex issue. Nevertheless, few studies have empirically examined how to orchestrate firm-specific HC. Therefore, the aim of this study is to examine how resource orchestration – operationalised as collaborative human resource management (CHRM) and entrepreneurial orientation (EO) both individually and combined – moderates the relationship between firm-specific HC and firm performance. Based on a sample of 151 Swedish manufacturing firms, the findings demonstrate that CHRM and EO do not independently influence the relationship between firm-specific HC and performance. However, firms with firm-specific HC benefit from either being highly entrepreneurial and relying on CHRM or being non-entrepreneurial and not focusing on CHRM; they perform worst if they are entrepreneurial without using CHRM. Whereas previous RBV-studies on resource exploitation have mainly stressed that HC has to be exploited, this study contributes to the RBV by examining how firm-specific HC should be exploited.

Purpose:                           

The purpose of this article is to identify and discuss the practical implications of the resource based-view of the firm.

Methodology:                   

Review of relevant literature.

Findings:                           

A number of recommendations are put forward and the practical implications constitute the main findings of this study.

Practical implications:     

The implications can be summarized by these recommendations: Diversify based on capabilities and not on the markets you are currently serving, focus on creating value together with your customers based on your resources instead of offering a set of products, integrate HRM practices with strategic management processes. The complexity of imitating resources is also discussed.

Originality:                      

Few publications have set out to develop implications of the resource-based view from a CEO’s point of view. This paper provides an easy-to-access review and summary of some of the main implications of the resource-based view.

Purpose – Numerous studies have set out to examine the relationship between strategic resources and firm performance. The traditional VRIO attributes have been the point of departure in most resource-based studies. This paper sets out to argue that the relationship between resources and performance is more complex. Thus, the purpose of this paper is to illustrate the complex relationship between a strategic resource and firm performance by providing an overview of different factors that can influence this relationship.

Design/methodology/approach – Relevant literature is reviewed and discussed.

Findings – It was found that five criteria must be fulfilled for resources to generate superior performance. These are identified and discussed. These criteria fit with existing resources, management capability, marketing capability, firm appropriation of rent, and non-competitive disadvantages.

Research limitations/implications – By using the criteria identified, resource-based theory can become less tautological. Also, the criteria highlight the importance of resource utilization and appropriation of resource-based rents.

Practical implications – The paper could contribute to an increased awareness among practitioners of the importance of focusing on factors which are additional to the VRIO-attributes when analyzing potential strategic resources. The criteria provide an easy-to-access framework for strategic analysis.

Originality/value – Whereas some specific aspects of the relationship between the possession of resources and firm performance have been reviewed in some RBT contributions, few studies have addressed the issue using a more holistic approach. Thus, this paper affords a broader approach on the relationship between strategic resources and firm performance.

Purpose

Absorptive capacity is a key competitive advantage and is defined as the capacity to absorb knowledge from the environment. Although some studies have examined how various antecedents to absorptive capacity differ between family firms and non-family firms, no studies have set out to specifically analyze absorptive capacity in the context of family firms. This paper discusses the ability of family firms to absorb external knowledge by analyzing the relationship between “familiness” and “absorptive capacity”.

Design/methodology/approach

By reviewing and combining studies on absorptive capacity and knowledge-management practices of family firms, new insights into the absorptive capacity of family firms are developed.

Findings

It is argued that due to higher levels of social capital, familiness is positively related to the ability to transform and use external knowledge (i.e. realized absorptive capacity). However, firms with high levels of familiness are likely to be inferior in acquiring and assimilating external knowledge (i.e. potential absorptive capacity).

Originality/value

Although previous studies have analyzed various knowledge-management practices of family firms, no studies have set out to specifically explore how familiness affects various dimensions of absorptive capacity.

Research on entrepreneurial orientation (EO) has mainly addressed outcomes of EO at the level of the firm. However, few studies have examined how EO affects employees. Using a multi-level analysis of 343 employees nested in 25 SMEs, revealed that EO will increase the degree of role ambiguity among employees. Social support from management was not found to have any effect on the relationship between EO and role ambiguity. However, social support from co-workers weakens the EO-ambiguity relationship and can counteract the negative effects of EO to some degree. The study contributes to the EO literature by being one of very few that have considered possible negative consequences of EO, and it also highlights how to reduce role ambiguity in entrepreneurial SMEs.

Purpose:  Although most studies on HPWS focus on various firm-level outcomes, there has been an increasing interest in how employees are affected by HPWS. However, most of these studies use social exchange theory and, based on an idea of reciprocal exchange, implicitly assume that all employees become more affectively committed to organizations using HPWS.  Based on social identity theory, we argue that management position and gender likely influence how individuals respond to HPWS. Thus, the aim of this study is to examine how HPWS affects affective commitment among managers, subordinates, men, and women.

Design/methodology/approach: Hierarchical linear model analysis of 356 employees in 26 Swedish small and medium-sized manufacturing companies.

Findings: In the sample examined, managers and women show increased affective commitment in organizations using HPWS. For men with non-managerial positions, the results indicate a reversed relationship, i.e. HPWS could actually reduce affective commitment.

Originality/value: The findings indicate the need to consider individual differences when examining the effect of HPWS, and highlight the usefulness of relational-oriented theories when studying the employee outcomes of HRM systems.

Purpose - Social representation theory (SRT) is a growing theory in social psychology research. SRT is about how individuals co-construct representations of various objects in different social settings. These social representations govern the attitudes and actions of individuals and groups. In spite of the growing interest in SRT in various fields, no studies have used SRT to understand resistance to organizational change. Thus, the purpose of this work is to illustrate how SRT can be used to understand the concept of resistance to change.

Design/methodology/approach - Review of the relevant literature on resistance to change and SRT in order to develop a conceptual framework for understanding resistance from the standpoint of SRT.

Findings - We develop a model that illustrates how three interrelated objects, i.e. the organizational process and the pre- and post-change situation, are co-constructed in social contexts. Also, we discuss how representations of these objects can co-exist (cognitive polyphasia). Our study illustrates the complexity of resistance to change by deconstructing the concept.

Originality/value - Application of SRT in order to analyze resistance to organizational change is a novel approach that provides several new insights. For example, whereas most publications regard advocates of change as sense-givers in the change recipient’s sense-making process, we argue for a more constructionist approach. Thus, all actors involved in the change process will affect each other and together co-construct the social representations. These social representations govern attitudes to change.

Enhancing the wellbeing of employees is a key feature of human resource management (HRM) and numerous HRM-practices to strengthen the wellbeing of co-workers have been developed. Although the benefits for the employees of such practices are obvious, the relationship between employee wellbeing and firm performance is unclear. In order to strengthen this relationship some studies have extended the concept of firm performance by including additional "soft" dimensions of performance. However, investing in wellbeing is, of course, associated with costs and several scholars argue that investments in the wellbeing of employees can be regarded as any other investment and from an owner's perspective it is essential to get a return on the investment. In the field of strategic HRM (SHRM), some attempts have been made to analyze the relationship between wellbeing, firm resources and firm performance. Most studies have, however, focused on the relationship between specific HRM-activities and firm performance or certain aspects of resource features. For example, how the wellbeing of employees can enhance the retention of human resources or how wellbeing can stimulate intrapreneurship and thereby generate short-term increases in profits. Thus, few studies have analysed the relationship between wellbeing, competetive advantages and performance from a holistic approach. Consequently, in this paper we present a resource-based analysis of the relationship between the wellbeing of employees and firm performance. We present three propositions regarding the relationship between wellbeing, resources and firm performance. These propositions illustrate the complexity of the relationship by discussing why wellbeing can enhance as well as reduce firm performance.

Even though, the human resource management literature has highlighted the importance of having employees that are committed to the organization, research on strategic human capital has yet to fully consider how commitment is related to human capital resources. In order to overcome the dominant individual-level conceptualization of commitment and to detail how commitment affects human capital resources, we develop the unit-level concept of commitment capital, which we divide into three levels: affiliative commitment capital, affinitive commitment capital, and absolute commitment capital. These conceptualizations are based on a 10-year case study and incorporate commitment into a strategic human capital framework, thus bridging the current gap between organizational commitment and human capital resources. 

The core question addressed in the natural resource‐based view (NRBV) of the firm is how to develop and exploit resources beneficial for both the natural environment and firm performance. Due to the resource constraints and increased competition facing small manufacturing firms, achieving this is a challenge for such companies. Building on the NRBV and resource orchestration literatures, we examine the relationship between green purchasing capabilities (GPCs), CEO's environmental orientation(EO), and firm growth. Results from 304 Swedish small manufacturing firms indicate a significant relationship between GPC and growth, and this relationship is positively moderated by the EO of the CEO.

The core notion of the resource-based view (RBV) is that the possession of certain resources can result in superior performance and, in order for this performance to be sustained, these resources cannot be perfectly mobile. Whereas previous reviews have mainly focused on the relationship between resources and temporary performance, no studies have systematically analyzed the extent to which empirical RBV studies have specifically considered immobility of resources. By analyzing a sample of 218 empirical RBV studies, the authors found that 17% of the studies directly measured some dimension of immobility (by, for example, actually measuring the level of social complexity, unique history, tacitness or tradability). Fewer than 2% of the studies measured the outcome of resource immobility, i.e. sustained performance differences. Based on these results, this paper discusses the consequences of overlooking this key dimension of the RBV (i.e. immobility) and suggests that, and discusses how, future research should consider resource immobility to a greater extent.

Purpose – Absorbing knowledge from partner firms is a key feature of marketing relationships. Recent publications have called for more dynamic and cognitive approaches in marketing relationship research. Also, established definitions of absorptive capacities have been questioned. This article aims to address propositions that take these overlooked and questioned elements into consideration, which can help explain conducts and dependencies, and affect relationship durability.

Design/methodology/approach – The authors put forward four propositions by combining literature on interfirm relationships and managerial cognition with evolutionary ideas from marketing and management literature.

Findings – The authors embrace a redefinition of potential absorptive capacity (the disposed capacity to absorb knowledge) and realized absorptive capacity (the absorption of knowledge actually performed). This distinction can, to some extent, be explained by the degree of cognitive attention given to the marketing relationship. Moreover, asymmetrically realized absorptive capacityvis-à-vis a partner substantially influences the dynamics of partners' conduct and dependency, which may vary the risk that the relationship will end.

Practical implications – The propositions illustrate how a motivated partner that gives more attention to the relationship is more likely to absorb more knowledge than its counterpart, which can threaten the durability of a relationship. Thus, managers need to be able to understand possible long-term consequences of the partner's conduct in order to avoid losses of joint strategic resources and relational benefits.

Originality/value – By advocating an evolutionary approach, an impetus for more dynamism in marketing relationship research is presented. This study also shows the importance of including the longitudinal dimension in analysis if one wants to understand change in – and durability of – marketing relationships.

The resource orchestration concept has attracted considerable interest in contemporary innovation research. However, resource orchestration is a manager-centric framework and not all of its components necessarily reflect the value-creation processes of organizations focusing on team-based innovation. Drawing on a single-case study of an innovative Swedish software company, we illustrate the roles of autonomous teams, customers, and top managers in orchestrating resources for team-based innovation. Moreover, we introducethe concept of resource flocculation to describe how key actors co-orchestrate various resource orchestration processes. The study contributes to research on resource orchestration by adapting the model to the conditions characterizing team-based innovation, and to research on team-based innovation by addressing how innovative teams are related to overall resource orchestration processes and, ultimately, organizational innovation outcomes.

Purpose – The purpose of this paper is to illustrate and argue for the necessity of deconstructing the entrepreneurship concept by analyzing entrepreneurial orientation (EO) at various levels of the business model.

Design/methodology/approach – Literature review supplemented with five illustrative cases.

Findings – A business model approach to entrepreneurship enables identification of the component of the business model in which entrepreneurship was started. This has several implications for analysis of the EO-performance relationship and for the identification of antecedents to EO.

Originality/value – The EO of firms has generally been analyzed at a generic level, i.e. the concept has been used to measure and analyze the overall entrepreneurship of firms. In this paper, the authors argue that EO can be present in various dimensions of a business and that firms can be entrepreneurial in certain areas and conservative in other areas.

Purpose

The aim of this study is to examine how entrepreneurial orientation (EO) and the use of management accounting practices (MAPs) in decision making affects the profitability of SMEs, and also to analyze the extent to which EO and the use of MAPs affects profitability differently in growing and non-growing SMEs.

Design/methodology/approach

The paper employs an empirical investigation which is based on a sample of 153 Swedish manufacturing SMEs. The data is analyzed by two- and three way interaction regressions.

Findings

EO and MAPs have a positive effect on profitability in non-growing SMEs, but the combined effect of EO and MAPs has no additional effect. However, for growing SMEs, high usage of MAPs in decision making is a prerequisite for EO to influence profitability.

Originality/value

This study is the first to use the resource-based view to examine the relationship between two dimensions of resource organization and SME profitability. Entrepreneurial orientation (EO) is used as a proxy for how resources are organized in order to identify opportunities, and management accounting practices (MAPs) are used as a proxy for how efficiently resources are organized.

Although it is widely accepted that entrepreneurial orientation (EO) improves firm performance, scholars have advised that particular attention should be paid to the context. In this research, we investigate a less explored context of franchising where business systems and procedures are usually dictated to franchisees by franchisors. Therefore, whether a franchisor should allow franchisees to pursue EO (innovativeness, proactiveness, risk-taking, competitive aggressiveness, and autonomy) is not clear. In the context of franchising, the majority of prior studies have mainly focused on the employment of EO as a unidimensional construct and at the franchisor level. In this research, we take a bottom-up perspective and evaluate the impact of different dimensions of EO on franchisees’ performance. Our analysis of a multi-group of 183 restaurant franchisees located in Sweden and Iran reveals that only the pursuit of proactiveness and competitive aggressiveness improves a franchisee’s performance and other dimensions do not play a significant role in improving performance in this context.

This study presents a multidimensional taxonomy of “ecopreneurship” for small manufacturing firms. Based on a cluster analysis of 312 Swedish firms, four distinct clusters are identified: pioneers, green dumpers, overlookers, and recyclers. These clusters are compared regarding their level of entrepreneurial orientation and firm performance. Based on the results, and because of the resource constraints associated with small firms, managers of such companies are advised to examine the economic consequences of specific environmental business practices and to adopt a less aggregated approach to ecopreneurship. This study illustrates the usefulness of a multidimensional scale when researching environmental behaviors and is a response to the lack of an empirically based classification of ecopreneurship configurations.

During a springboard session, the entrepreneur meets an expert panel which gives himor her strategic advice. How these meetings transpire is of great importance when itcomes to the support of regional, as well as national entrepreneurship and economicgrowth. The purpose of this paper is to investigate what is verbally expressed duringthese meetings and how this can assist entrepreneurship. Eleven different springboardsare investigated via the method of content analysis. These springboards concernedentrepreneurs who merely sought strategic business advice or those who applied forventure capital. The results indicate that the entrepreneurs who applied for venturecapital had less use for the advice than the other group. This can partly be explainedby panel members’ focus on risk and the institutionalized conditions which build on arational discourse.

Purpose: This paper strives to understand the role of resource orchestration (RO) in the rapid growth of high-tech small and medium-sized enterprises (SMEs). Design/methodology/approach: Based on a comparative case study, RO is compared between a high-tech family firm and a high-tech non-family firm. To capture the complexity of RO, this study applies a longitudinal approach using a large volume of archival and interview data gathered over ten years. Findings: The configuration of family-firm paradoxical growth-oriented RO emphasizes RO based on collectivism and responsibility, although relying on large-scale conforming normative control. In contrast, the configuration of non-family-firm growth-oriented RO emphasizes administrative-based delegation and management-supported value creation. Originality/value: By suggesting ownership-based RO configurations, this study provides insights into how ownership types, i.e. family firms and non-family firms, affect RO in firms operating in complex and dynamic environments. These configurations explain how and why RO is arranged in a growth context. 

The purpose of this paper is to understand the role of resource orchestration in rapidly growing owner-ledcompanies in dynamic environments. Based on a comparative case study of owner-led companies, the resource orchestration in a owner-led familyfirm is compared with an owner-led one. A large amount of archival data and interviews are used. By uncoveringthe resource management process, the findings indicate a difference in focus between the owner-led familyfirm and the owner-led firm. The resource orchestration in the family firm focuses to a greater extent on therecruitment of new staff, the incorporation and the control of “right” values and norms. On the other hand, theowner-led business puts a higher focus on performance metrics and the documented coordination of teams andcustomers. By revealing the management role in a dynamic industry, the present study criticizes and extendsgeneral findings of the resource orchestration literature.

Purpose – The purpose of this paper is to understand the role of resource orchestration in rapidly growing founder-led companies.  

Design/methodology/approach – Based on a comparative case study of founder-led companies, the resource orchestration in a founder-led family firm is compared with a founder-led one. To comprehend the complexity of resource orchestration, a large amount of archival data and interviews are used. By using data derived from a period of ten years, the present study has a longitudinal approach.

Findings – By uncovering the resource management process, the findings indicate a difference in focus between the founder-led family firm and the founder-led firm. The resource orchestration in the family firm focuses to a greater extent on the early stages of the resource management process, i.e. the recruitment of new staff, the incorporation and the control of “right” values and norms. On the other hand, the founder-led business puts a higher focus on performance metrics and the documented coordination of teams and customers. However, both companies rely largely on self-organizing teams. By revealing the management role in a dynamic industry, the present study criticizes and extends general findings of the resource orchestration literature. Moreover, it contributes to the organizational culture and firm growth entrepreneurship literature.      

Practical implications – The study shows how founder-based companies can grow successfully in a dynamic environment. Furthermore, it reveals how software companies’ resources can be managed and bundled in a successful manner.

Originality/value – the present study conveys fine-grained insights in complex management processes operating in a dynamic environment.

PurposeSeveral studies have highlighted the importance of management accounting practices such as formal short-term planning and formal long-term planning for SME performance. However, few studies have considered what actually explains differences in the use of formal planning (from a management accounting approach) in SMEs. Family ownership and EO are two plausible explanations for such differences. The aim of this study is therefore to examine how family ownership and EO are correlated to the use of formal short-term planning and formal long-term planning in SMEs.

Design/methodology/approachIn this study, we examined how family ownership and entrepreneurial orientation affect the use of formal planning by analyzing a sample of 156 Swedish manufacturing SMEs, using multivariate regression analysis.

FindingsAs could be expected, we were able to validate the notion that family firms use less formal planning than non-family firms. However, in contrast to some previous studies, we found that there is a strongly positive relationship between entrepreneurial orientation and the use of formal short-term planning and long-term planning.

Originality/valueWhereas many previous studies on family business have assumed that family firms use less formal planning than non-family firms, the present study is one of few to actually confirm this notion. Also, this study has provided strong evidence that EO is positively correlated to the use of formal planning, in the short term and in the longer term.