Strategy, control activities, monitoring and effectiveness

Adebayo Agbejule and Annukka Jokipii

Managerial Auditing Journal, 2009, vol. 24, issue 6, 500-522

Abstract: Purpose - First, this paper aims to provide empirical evidence of the interaction between the components of an internal control system. Second, it seeks to integrate work from the field of strategy and that on the internal control system from the field of auditing. The purpose of this paper is to enable a more profound understanding of how different strategic orientations may influence effectiveness, depending on the components of the internal control system. Design/methodology/approach - Data were collected through an online questionnaire and analyzed using multiple regression analysis, i.e. a three‐way interaction model. The result was a usable sample of the opinions of 741 managers working in Finland. Findings - The results indicate that, for prospector firms, high degrees of internal control activity and low degrees of monitoring ensure a greater effectiveness of the internal control system. On the other hand, for analyzers a high degree of internal control activity and high degrees of monitoring lead to a highly effective internal control system. In addition, our findings indicate no significant differences between defenders and analyzers. Research limitations/implications - The research is limited to only two components of the internal control system, namely, internal control activities and monitoring. Future research is needed to examine the interactions of other components of the internal control system. Practical implications - The paper demonstrates the need for managers to be aware of the drivers of the effectiveness of the internal control system and the relationships essential to drive effectiveness, especially when operating in different strategic fields. While all components of an internal control system are vital, this study shows that a good fit between them can lead to improved effectiveness. Originality/value - This is the first empirical study that has used a three‐way interaction method to study internal control structures and their effectiveness in an organizational context. Coupled with previous work, it suggests the need for both researchers and practitioners to examine the interactions of an internal control system and how they impact on the effectiveness of that system.

Keywords: Internal control; Management effectiveness; Management strategy; Auditing; Finland (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:02686900910966503

DOI: 10.1108/02686900910966503

Access Statistics for this article

Managerial Auditing Journal is currently edited by Professor Jie Zhou

More articles in Managerial Auditing Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().