The Role of Effective Control Systems in Capturing Innovation

53 Pages Posted: 4 Aug 2017 Last revised: 12 Nov 2018

See all articles by Brian P. Miller

Brian P. Miller

Indiana University - Kelley School of Business - Department of Accounting

Amy Sheneman

Ohio State University (OSU) - Department of Accounting & Management Information Systems

Brian Williams

Indiana University - Kelley School of Business - Department of Accounting

Date Written: November 10, 2018

Abstract

This study examines the role of effective control systems in capturing corporate innovation. Although we expect effective control systems to improve information flows within the firm by allowing managers to better identify and patent their most valuable intellectual property, a priori this relationship is unclear as these same control systems may create an overly restrictive bureaucratic environment that mitigates the benefits of effective controls on innovation. Consistent with our expectation, we find evidence that effective control systems are associated with more innovative capture (i.e., number of patents, patent citations, and weighted citations). Our results are robust to the inclusion of firm fixed effects, remediation tests, entropy balancing, and the use of the market value of patents as an alternative measure of the importance of the innovation. Overall, the results of our study suggest higher quality control systems are positively associated with the ability of a firm to get the most out of its innovative projects.

Keywords: Innovation Capture, Internal Controls, Patents

JEL Classification: M41, O31

Suggested Citation

Miller, Brian P. and Sheneman, Amy and Williams, Brian, The Role of Effective Control Systems in Capturing Innovation (November 10, 2018). Kelley School of Business Research Paper No. 17-57. Available at SSRN: https://ssrn.com/abstract=3013355 or http://dx.doi.org/10.2139/ssrn.3013355

Brian P. Miller (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2606 (Phone)

Amy Sheneman

Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )

2100 Neil Avenue
Columbus, OH 43210
United States

Brian Williams

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
204
Abstract Views
1,083
rank
147,119
PlumX Metrics