Strategy, control activities, monitoring and effectiveness

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 t...

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