Explaining the adoption of machine learning-based financial fraud detection in Arab Gulf family firms

Type of the article: Research ArticleAbstractFinancial fraud in Arab Gulf family firms threatens key stakeholders, yet many still rely on informal, trust-based controls. The purpose of this study is to explain why some family firms in this region adopt machine learning-based financial fraud detection systems, while others remain locked into legacy mechanisms of control. Results from a cross-sectional survey of 416 owners, executives, finance, and compliance officers from family businesses in Saudi Arabia, the United Arab Emirates, and Qatar were analyzed using variance-based structural equation modeling and multi-group analysis. The results show that perceived effectiveness (β = 0.08, p < 0.01) and regulatory support (β = 0.07, p < 0.05) are the strongest positive drivers of the likelihood of adopting machine learning-based fraud detection. Awareness of machine learning, ethical concern, and existing fraud detection practices also have significant positive effects (β ≈ 0.03-0.05, p < 0.05), while barriers to adoption exert a significant negative influence (β = −0.05, p < 0.05). The structural model explains 52.7% of the variance in the likelihood of adoption and 46.8% of the variance in perceived effectiveness. Indirect effects indicate that awareness and regulation promote adoption through perceived effectiveness, whereas barriers reduce adoption through heightened ethical concern. The findings suggest that stronger governance, clearer and incentive-aligned regulation, and explainable, well-governed machine learning implementations are essential to shift family businesses in the Arab Gulf region from trust-based to data-driven fraud detection.