The impact of the knowledge creation process on the value added by the internal audit function in European banks
(2026) Journal of Accounting & Organizational Change — p. 1-25 (2026)
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- Abstract
- Purpose – To examine the characteristics and relations between different phases of the knowledge creation process and their impact on the value added by the internal audit function (IAF) in banks. Design/methodology/approach – A quantitative cross-sectional study was conducted to examine the impact of the knowledge creation process on the value added by the internal audit function (IAF) in banking. Confirmatory factor analysis (CFA) was applied to validate the measurement model, while structural equation modeling (SEM) was performed to assess the structural relationships. Data were collected from 54 internal auditors across European countries working in banking. Findings – The findings show positive correlations among all dimensions of the knowledge creation model within internal audit functions in banking. Internalization of explicit knowledge into tacit emerges as the key driver of value added by IAFs in banks, while other phases show no significant direct effects. Practical implications – A positive learning culture, training, and participation in knowledge Internalization processes should be encouraged within IAFs in banks. The evaluation of internal auditors during recruitment and performance appraisal should include their ability to internalize explicit knowledge into practical tacit capabilities that enhance value added in the banking context. Originality/value – The study points to the knowledge creation process as a key driver for enhancing the value added by IAF in banks. By focusing on the banking sector, it provides novel evidence on how specific phases of the knowledge creation process within IAFs contribute to the value they add in a highly regulated, knowledge-intensive industries.
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Citations
Vucic, D., & Raemdonck, I. (2026). The impact of the knowledge creation process on the value added by the internal audit function in European banks. Journal of Accounting & Organizational Change, 1-25. https://doi.org/10.1108/JAOC-02-2025-0040 (Original work published 2026)