Controlling Differently: Internal Control Digitalization as a Dynamic Capability. A Conceptual Framework and Research Propositions

Abstract

The digitalization of internal control is widely presented as a lever of performance, yet the mechanisms behind this contribution remain unclear. This article argues that the dominant readings of the phenomenon, whether technical, compliance-based, or resource-based, share a common assumption: they treat digitalization as a state rather than as an ability, which prevents them from explaining why comparable tools produce different outcomes and why well-performing control systems become obsolete. Drawing on an integrative literature review and a theory adaptation approach, the article reinterprets internal control digitalization through dynamic capabilities theory. It distinguishes technological resources, operational capabilities, and dynamic capabilities, and defines internal control digitalization as a capability combining continuous risk sensing, deliberate response, and ongoing reconfiguration of the control system. This reinterpretation uncovers a tension between reconfiguration and the stability on which control reliability rests, and introduces the concept of reconfiguration governance, which is distinguished from IT change management and structured around five dimensions. Six propositions follow. The capability affects organizational performance mainly through two parallel and partial mediators, risk management effectiveness and internal control reliability, provided that data are of adequate quality and that automated controls remain under human oversight. Reconfiguration governance determines whether the capability strengthens or weakens control reliability, environmental dynamism moderates the relationship in an inverted U-shaped manner, and institutional pressures weaken it only when they lead to symbolic adoption. The article confronts these propositions with competing arguments, situates them in the Moroccan textile sector, and proposes an operationalization with a view to their empirical validation.