The ubiquitous influence of regulation on entrepreneurial action: How relations with accountants mediate small company adaptation to financial reporting legislation
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 11 April 2016
Abstract
Purpose
The purpose of this paper is to theorise, and demonstrate empirically, how regulation generates indirect impacts on small companies that arise through the medium of relationships with stakeholders whose actions affect them. Specifically, the paper explores how relations with stakeholders shape the process of small company adaptation to statutory financial reporting obligations.
Design/methodology/approach
The analysis draws principally on qualitative interview data from small company preparers of abbreviated accounts and their accountants, but also uses survey data to demonstrate the prevalence of the account filing and advisory practices reported in interview.
Findings
Small companies’ relations with accountants mediate the influence of financial reporting regulation by shaping how firms discover, interpret and adapt to their statutory obligations. Where accountants inform small companies of the option to file abbreviated accounts, or advise them to file such accounts, and clients act on that advice, then relations with accountants mediate the impact of regulation on that business. Accountants typically advise small company clients to file abbreviated accounts as the “default position”, one departed from only in very specific circumstances. Accountants are complicit, therefore, inadvertently or otherwise, in the production of the effects of clients’ filing decisions.
Originality/value
The study expands the conception of how regulation contributes to entrepreneurial action by focusing on the indirect effects arising for small firms via their relations with the stakeholders with whom they interact. Regulatory regimes are a condition of all forms of entrepreneurial action and the ensuing performance outcomes. Regulation therefore exerts a ubiquitous influence on entrepreneurial action that is substantial, pervasive and enduring. Without reference to the necessary enabling functions of regulation, explanations of entrepreneurial processes remain incomplete.
Keywords
Acknowledgements
This study was supported by the Scottish Accountancy Trust for Education and Research and by the Institute of Chartered Accountants of Scotland. The author is grateful to three anonymous referees for their supportive comments.
Citation
Kitching, J. (2016), "The ubiquitous influence of regulation on entrepreneurial action: How relations with accountants mediate small company adaptation to financial reporting legislation", International Journal of Entrepreneurial Behavior & Research, Vol. 22 No. 2, pp. 215-233. https://doi.org/10.1108/IJEBR-07-2015-0144
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited