Title: Accounting knowledge in innovative firms - direct contacts with external auditors for strategic actions

Authors: Marita Blomkvist; Jeaneth Johansson; Malin Malmström

Addresses: Department of Business and Administration, School of Business Economics and Law, University of Gothenburg, P.O. Box 610, Gothenburg SE-405 30, Sweden ' Entrepreneurship and Innovation/School of Business, Engineering and Science, Luleå University of Technology/Halmstad University, Luleå SE-971 87, Sweden ' Entrepreneurship and Innovation, Luleå University of Technology, SE-971 87 Luleå, Sweden

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.

Keywords: accounting knowledge; external auditors; innovative firms; strategic actions; owner-managers; entrepreneurship; informal management control; innovation process; competence-based view.

DOI: 10.1504/IJMFA.2016.081852

International Journal of Managerial and Financial Accounting, 2016 Vol.8 No.3/4, pp.209 - 229

Available online: 25 Jan 2017 *

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