Accounting knowledge in innovative firms - direct contacts with external auditors for strategic actions Online publication date: Sun, 29-Jan-2017
by Marita Blomkvist; Jeaneth Johansson; Malin Malmström
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 8, No. 3/4, 2016
Abstract: Managers' use of auditors in decision processes is well known in the accounting literature, but little is known about owner-managers in innovative firms and their acquisition of accounting knowledge through direct contacts with external auditors. We conducted a multiple embedded study of exploratory character based on 21 interviews with owner-managers and external auditors connected to six innovative firms. We show that owner-managers in innovative firms apply informal management control in early phases of the innovation process and thus also rely heavily on external auditors for such purposes. However, management's acquisition of accounting knowledge may contribute over time to the development of a more formalised control system as their competence increases. This study suggests that a competence-based view may be useful for understanding the role of accounting and external auditors in innovative firms' management control systems.
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