In this article, we have provided three principal theoretical contributions. First, we have introduced the concept of advisor embeddedness as a potential moderating variable in the relationship between advisors and firm performance. The concept of embeddedness has strong theoretical foundations and has previously been used in the context of the RBV. Furthermore, embeddedness encompasses many of the issues that prior advisor literature has evoked with respect to the importance of the relationship between the client and the advisor. Our second contribution is the identification of specific family firm issues that may affect their need for advisors—and in particular accountants. This was done using an RBV theoretical lens. Furthermore, we have also identified how the issue of family may affect the need and importance of advisor embeddedness. Third, in this study we focused on accountants specifically, but we believe that our conceptual model can be used to explain the effects of other types of advisors including lawyers, family therapists, and family business consultants. We hope that future research uses our conceptual model to test its
validity for other types of family firm advice. These three principal theoretical contributions should provide
a foundation for future empirical research into the impact of external accountants and other advisors on
performance and also into the moderating role of advisor embeddedness.
In summary, based on our results, we can conclude that external accountant usage is positively related to
sales growth. However, this is conditional on the firm having appropriate strategic planning processes in place
and highly embedding the accountant within the firm. Under these circumstances, we find that the usage of an
external accountant is associated with an 8.1% increase in sales growth. We also find that firms that have a low
level of strategic planning processes in place may benefit from using an external accountant. However, this
benefit is limited to their survival rates and is again conditional on the accountant being highly embedded within
the firm. Under these circumstances, using an external accountant is associated with a 29% decrease in the
probability of failure. Our study, however, has several limitations that need
to be addressed in future research. First, we explore the relationship in an Australian context; this is a highly
developed Western economy and as such the results may not translate to developing nations. Future researchers
could explore this relationship in emerging markets; this would not only be of interest to researchers, but also for
government policy makers in these markets. Second, the data that we use are based on an older Australian government survey. We would like to see future replications of this study that use more recent data. Furthermore, the
fact that we used a government survey, which was not specifically developed to test our hypotheses, is another
limitation. As a result, we are forced to use proxies to operationalize our theoretical constructs of interest. For
example, the embeddedness of the accountant was operationalized by low and high usage of accountant advice.
This naturally limits our ability to find nonlinear effects in the relationship. Future research would ideally investigate this relationship in more detail and operationalize the moderating constructs more accurately. Finally, we have attempted to address simultaneous causality bias by using lagged variables in our growth and survival models. However, as we only observe accountant usage at one point in time (i.e., we do not observe when the accountant was first used), there may still be issues with simultaneous causality. We hope that future research may further attempt to address this issue.
Despite these limitations, our results have significant practical relevance. For example, our findings suggest
that it would be beneficial for family firms to retain the services of an external accountant. Furthermore, we identify how the benefits of external accountants can be maximized. This is achieved by embedding the accountant
within the firm by fostering a close client–advisor relationship. In practice, embeddedness is a process that
encompasses mutual collaboration, frequent consultations, and the development of trust between the advisor
and the family firm. We find that this will improve both sales growth and survivability. We find additional benefits of increasing the level of SP processes within the family firm. These include the use of strategic plans, business
plans, budget forecasting, regular financial reports, and the comparison of performance with other businesses. Such activities may effectively provide a path for the firm to move beyond simply surviving and toward sales growth. This is a critical issue for family firms, as the majority do not survive to the second generation.