Management Control Systems and Succession in Family Firms: an Italian Case Study

One of the dominant research topics in family business phenomenon are the management succession and the professionalization. Our main aim is to underline the importance of Management Control Systems (MCSs) implementation and evolution, in conjunction with professionalization, in supporting a succession process in family businesses, especially if small and medium-sized ones, in order to achieve a long-run value creation and to guarantee the survival of the firm. In particular, we tried to understand how formal systems - specifically Diagnostic Control Systems (DCSs) and Interactive Control Systems (ICSs) which represent Performance Measurement Systems (PMSs) - together with a professionalization phenomenon can affect family businesses strategy implementation and indirectly performances, especially during a generational handover process. Among qualitative approach, we made an explanatory case study, opting for a single case study, i.e. Vega Tools International, which is quite representative for this research topic. We can affirm that during the process of succession, especially if characterised by a strong crisis that makes urgent a change in the business strategy, the professionalization phenomenon together with the introduction of formal MCSs are relevant organizational changes to improve strategy formulation, implementation and control. In addition, the interplay and the tension between formal DCSs and ICSs are very useful in a family business, in order to support the succession, in conjunction with the professionalization phenomenon, as they permit to couple the family business culture together with the formal competences of managers. The implications are several. Formal PMSs can be sustained with positive effects on succession and strategy implementation. Indeed, DCSs and ICSs and their dynamic tension represent a positive solution to maintain competitiveness above all when the founder of the firm is preparing his succession. In addition, ICS contributes to the emersion of new opportunities and creativeness within the business and makes possible the top manager, usually a member of the family as in our case study, to capture emergent strategic initiatives that arise from the bottom of the structure, usually represented by non-family members. One limitation of the paper is represented by a single case study method, which makes difficult to generalize uncritically our conclusions. Furthermore, in addition to the interview technique we could also adopt additional data collection methodologies, based for example on questionnaires sent to representative employees in a sample of family businesses.