Why pill becomes poison? Examining the damaging effect of increased information technology use on internal control process failures

We examine how the impact of accounting and finance enterprise systems (AFES) use on internal control process failures is influenced by the competence (or lack thereof) of internal controls. We draw on resource- and knowledge-based theories to motivate our hypotheses. We test our model using a six-year multisource panel dataset for 143 firms. We find that when firms lack requisite competence for internal controls, AFES use has a damaging effect on internal control processes, widening the scope of process failures. Our findings show that inopportune pursuit of information technology use initiatives can have far-reaching adverse impacts on firms.