The Impact of Control Systems on Corporate Innovation

Posted: 31 Jan 2022

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: January 24, 2022

Abstract

This study examines the impact of control systems on corporate innovation. Innovation is key to firm performance and growth, allowing corporations to stay competitive in their industry. We expect control systems to improve information flows within the firm by allowing managers to better identify and patent their most valuable intellectual property. Despite our prediction that control systems positively impact innovation, a priori, this relation is unclear as these same control systems may create an overly restrictive bureaucratic environment that may mitigate the benefits of effective controls for innovation. Using various measures of control system quality, we find evidence that effective control systems are associated with more innovation. Overall, the results of our study suggest effective control systems are associated with the ability of a firm to leverage its innovative projects. Our results suggest that corporations with effective control systems are more likely to be able to react to market and technology changes by ensuring their best ideas are patented.

Keywords: internal controls, innovation, patents, research and development, internal information flow

Suggested Citation

Miller, Brian P. and Sheneman, Amy and Williams, Brian, The Impact of Control Systems on Corporate Innovation (January 24, 2022). Contemporary Accounting Research, Forthcoming, Kelley School of Business Research Paper No. 2022-06, Available at SSRN: https://ssrn.com/abstract=4019624

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

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