Cultural Paradoxes in Financial and Control Management of Family SMEs: Agenda for Future Research in the Emerging Moroccan Context

Abstract

Purpose: This study aims to investigate the impact of nepotism and cultural effects on the financial management and internal control systems of family businesses in the Moroccan context. Design/methodology/approach: Our study covered a sample of 14 individuals of seven firms, through qualitative research based on semi-structured interviews. Findings: Our findings indicate that nepotism can have a detrimental impact on financial decision making and resource allocation in family businesses, while cultural values and beliefs play a major role in determining the way financial management and control systems are executed. Our research explains that the effect of nepotism on the effective implementation of internal control systems in family small and medium-sized enterprises (SMEs) is brought about through the presence of familial ties. In many family businesses, accountants are often hired based on personal relationships (favoritism), which is crucial for the effective performance of internal control functions. This is because control is typically maintained informally through trust placed in family members. Originality: This study provides a unique perspective on the challenges faced by family businesses in the Moroccan context, highlighting the importance of considering cultural and nepotistic factors when evaluating their financial management and control systems. Practical implications: The findings have practical implications for family businesses in Morocco, indicating the need for clear and transparent governance structures, and taking cultural values and beliefs into consideration when developing financial management and control systems. Further research is needed to deepen our understanding of these issues and to develop effective strategies to overcome the challenges faced by family businesses in the Moroccan context.