RTE Research

RTE research track presents the latest research results of the Real-Time Economy Competence Center. The track is organized into three sessions.

Session 1: New Era of Accounting: How to Survive in the Second Machine Age?

Growing digitalization and emergence of technologies such as cloud computing have far-reaching effects on professional B2B services. Knowledge work, which was spared from radical changes experienced in other industries, is now disrupted by automation, robotics and rapidly developing cloud-based services aimed at replacing human experts at work. Customers are becoming increasingly demanding, expecting professional services to provide a user experience akin to Uber or Facebook, rather than that of SAP or traditional accounting office. This session covers four years of a research on implications of cloud computing on accounting outsourcing in SMEs. Themes discussed during the session include: adoption of cloud computing in organizations; reasons and motivations to outsourcing accounting tasks in cloud context; and approaches to organizing around cloud-based information systems for accounting firms. The research is a part of Aleksandre Asatiani’s doctoral dissertation.

Included studies:

Session 2: Automation

Paper 1: Collective Minding through Automation: How to build Digital High Reliability Organizations? Authors: Antti Salovaara, Esko Penttinen, Aalto University; Kalle Lyytinen, Case Western Reserve University.

Abstract: High Reliability Organizations (HROs) operate in risky and safety-critical environments where failure avoidance overrides cost efficiency and other traditional performance measures. Research on military, air traffic control, and similar domains has identified five key HRO characteristics: preoccupation with failure, reluctance to simplify interpretations, sensitivity to operations, commitment to resilience, and underspecification of structures. There are fewer studies on digital technologies’ role in HRO operations. We address this gap with a case study in a leading malware (e.g., anti-virus) protection firm, which must establish high reliability in its digital operations. While the daily influx of millions of samples and the continuous mutation of malware attacks requires large-scale automation in malware protection, it also calls for continuous fine-tuning and re-engineering through human intervention. We examine the constant balancing of automated and human effort driven by the preoccupation with potential hidden vulnerabilities. This provides a starting point for conceptualizing “digital HROs” as a new research domain for organizational research.

Paper 2: Design principles for Standard Business Reporting – evidence from an action research study, Hannu Ojala (joint paper with Jill Collis, Esko Penttinen, Tuija Virtanen).

Standard Business Reporting (SBR) initiatives have developed in a number of countries in order to reduce the burden of financial reporting. SBR allows joint tax and financial reporting through a common government gateway, thus reducing the administrative burden of statutory financial reporting. In Europe, SBR projects are a response to the European Accounting and Transparency Directives, and the European Digital Agenda. An SBR initiative is an example of a complex and innovative project that aims at implementing a digital business reporting standard and requires the co-ordination of public and private constituencies. Drawing on the findings of a longitudinal qualitative empirical study in Finland, we contribute to the literature by identifying a set of fundamental and enhancing design principles in SBR projects: (1) competence, (2) leadership/vision, (3) multi-channel communication, (4) intelligent scope, (5) expertise commitment, (6) track record, and (7) co-creation. Our findings offer a guide that will be useful to other jurisdictions embarking on SBR projects using XBRL.

Session 3: Innovation in Financial Administration: Standards, Systems and Services

Paper 1: Identification and ranking of selection criteria during the selection of an accounting service provider among Finnish SMEs, Author: Nikolay Tarasov, Aalto University

Financial accounting tasks have been increasingly outsourced to external providers by SMEs throughout the world, Finnish SMEs not an exception. Such practice allows companies to focus on core activities and gain access to expertise of a professional accountant. At the same time, similarly to many business processes, many accounting tasks have been automated. Accounting information systems have significantly improved accounting processes in many ways, e.g. increasing efficiency and accuracy. Recent technological advances such as cloud computing, mobile-devices and advanced analytics, among others, have greatly enhanced accounting software and can potentially redefine the role of the accountant and change competitive position of players in the industry. The goal of this study was to uncover what Finnish SMEs value when choosing an accounting service provider. This goal was accomplished through identifying criteria that played role in the decision-making progress and ranking these criteria according to the weight each criterion has on the final decision.

As a result of the study, seven selection criteria were identified: overall cost of the bundle, customer references, accountant’s certification, level of personal service, service development, software usability, and software accessibility. The role of each criterion in the decision making process as well as preferred states within each criteria were determined using discrete choice experiment in the form of full profile choice-based conjoint analysis. The results of the discrete choice experiment have shown that all seven criteria played significant role in the decision making process. The top three criteria were software usability, software accessibility and accountant’s certification. The finding signals the high importance SMEs place on the accounting software as well as the level of professional expertise of the accountant. In the light of growing discussion about the shift in the accounting profession towards providing more advisory services, the results also showed that a certain pre-agreed amount of personal counseling service was slightly preferred to the dynamic when an accountant proactively provides advisory services to the client.

Paper 2: Implementation Strategies in Software Development – Case XBRL, Antti Karjalainen

The study is a descriptive multiple case study that focuses on four companies that are all doing a similar XBRL functionality implementation at the same time. The theoretical framework of the study consists of multiple factors, out of which network effect and path dependence are the most prominent theories that are used to guide the case study design. The reviewed literature categorizes software implementation strategies according to how deeply the new functionality is integrated into existing systems, categorizing software implementations into bolt-on, built-in, and deeply embedded implementation strategies. The findings from the case study indicate support for this kind of categorization in the observed cases, although the categories should be considered to be more of a continuum than set of discrete classes.
The results of the case study also indicate that, in the cases that were observed, network effects and path dependence play a role in the software implementation strategy selection but a significant factor in the implementation strategy decisions is also the uncertainty of the future adoption, development, and use of the technology in question. In an inter-organizational context, companies weigh in the perceived benefits of a software implementation against their confidence in the future use of that technology, forming an estimate of the expected value of the future benefit of the software implementation. This expected value will then in turn factor into the software implementation strategy decision and partly contribute to how deeply the company is willing to integrate the functionality into their existing systems.