Microfoundations of Small Business Tax Behaviour: A Capability Perspective

Small business tax behaviour has received surprisingly little attention. We argue that an organizational capability perspective using microfoundations will allow us to better understand the relationships between different drivers and the dynamics of small business tax behaviour. This study draws on...

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Bibliographic Details
Published inBritish journal of management Vol. 29; no. 3; pp. 497 - 513
Main Authors Battisti, Martina, Deakins, David
Format Journal Article
LanguageEnglish
Published London Blackwell Publishing Ltd 01.07.2018
Subjects
Behavior
Compliance
Grounded theory
Management
Owners
Regulation
Small business
Taxation
Taxes
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Summary:Small business tax behaviour has received surprisingly little attention. We argue that an organizational capability perspective using microfoundations will allow us to better understand the relationships between different drivers and the dynamics of small business tax behaviour. This study draws on in‐depth interviews with 42 small business owners who are matched with the firms’ factual tax compliance status. Using grounded theory, we build a framework that (a) identifies different microfoundations of small business capability to manage tax and (b) explains the dynamic nature of the relationship between organizational capability and compliance. Findings suggest that high capability does not necessarily translate into high tax compliance and this relationship is mediated by the owner‐managers’ perceptions of taxation as well changes in the economic and regulatory environment.
Bibliography:This research was made possible through funding provided by the Royal Society of New Zealand's Cross Departmental Research Pool, involving contributions by the Ministry of Business, Innovation and Employment and the Inland Revenue Department.
ISSN:1045-3172
1467-8551
DOI:10.1111/1467-8551.12244