Dissertations, Theses and Capstone Projects

Date of Award

Spring 2012

Degree Type


Degree Name

Doctor of Business Administration (DBA)



First Advisor

Dr. Audrey Gramling

Second Advisor

Dr. Torsten Pieper

Third Advisor

Dr. Dana Hermanson


While the internal auditing function (IAF) has been studied extensively in publicly traded firms, relatively little is known about the function and related outcomes among privately held family businesses. However, family businesses play a leading role in economic production and employment in the U.S. and globally. The blending of family culture with organizational culture in family businesses is a key aspect that differs from nonfamily businesses and across family businesses. This research develops the new construct of family business culture as a replicable measure of the influence of the combined cultures of the family and the business. Both essays include family business culture as a moderating variable to provide a detailed analysis of differences between family businesses. Data was collected utilizing an online survey. Essay 1 extends agency theory into the area of the IAF in privately held family businesses to address conflicting research concerning family involvement and related agency costs. The research examines three unique characteristics of privately held family businesses that could influence the investment in an IAF; family involvement in ownership, management, and on the board. The logistic regression results indicate an unexpected positive relationship between family involvement on the board and the existence of an IAF, with no moderating influence of family business culture. An integration of two theories provides the theoretical foundation for Essay 2. Agency theory is used to investigate the potential impact of the investment of an IAF on objective and subjective financial performance. Social exchange theory is employed to assess the potential effect of an IAF on employee trust in top management and in the business and affective organizational commitment. The multiple regression results do not support a significant relationship between the level of investment in an IAF and the five outcome variables. Analysis supports a positive relationship between the existence of IAF and both measures of financial performance. The moderating influence of family business culture was not significant. This research is the first step in gaining more knowledge of family involvement as antecedents of an IAF in privately held family businesses and the outcomes of that decision in five critical areas.

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