Reconstructing legitimacy of internal auditing during ERP implementations: Two contrasting cases

Purpose – This study examines how the legitimacy of internal auditing is reconstructed during ERP-driven technological change. Design/Method/Approach – The study is based on the comparative analysis of internal auditing and its transformation due to ERP implementations at two case firms operating in the food sector in Egypt – one a major Egyptian multinational corporation (MNC) and the other a major domestic company (DC). Findings – Internal auditors (IAs) at MNC saw ERP implementation as an opportunity to reconstruct the legitimacy of internal auditing work by engaging and partnering with actors involved with the ERP change. In doing so, the IAs acquired system certifications and provided line functions and external auditors with data-driven business insights. The ‘practical coping mechanism’ adopted by the IAs led to the acceptance (and legitimacy) of their work. In contrast, IAs at DC adopted a purposeful strategy of disengaging, blaming, and rejecting since they were skeptical of the top management team’s sincerity. The ‘disinterestedness’ led to the loss of legitimacy in the eyes of the stakeholders. Originality – The article offers two contributions. First, it extends the literature by highlighting a spectrum of behavior displayed by internal auditors (coping with impending issues vs. strategic purposefulness) during ERP-driven technological change. Second, the article contributes to the literature on legitimacy by highlighting four intertwined micro-processes— participating, socializing, learning, and role-forging — that contribute to reconstructing the legitimacy of internal auditing