Technology changes and the Norwegian accounting industry: a profitability analysis perspective

2015

This thesis analyzes the Norwegian accounting industry using the framework of strategic

management accounting. The perspective chosen is that of a strategic profitability analysis.

Focus is placed on how the development and adoption of new technology are affecting the

industry, and how the industry can adapt to changes.

The empirical data has been collected using two case studies and a small sample of firms. The

thesis starts with a macro- and industry analysis of factors influencing the Norwegian

accounting industry. Second, an analysis of profitability on the basis of a sample of twenty

firms from across the country is conducted. Third, an analysis of the most important drivers of

profitability is completed. Finally, changes and challenges caused by the development and

adoption of new technology are described. The discussion is continued further with a

suggestion to how the two case firms can adapt to changes caused by technology.

The analysis revealed that the influence from technology is strong and that profitability has

been rather good. However, we might expect the larger firms to dominate the industry in the

future. The small- and medium sized firms are currently the most profitable. Important drivers

of profitability are related to scale, capacity utilization, learning and spillovers, technology,

and interrelationships. The main challenge caused by technology is that revenue is lost due to

automation as tasks takes less time to complete. Firms can therefore no longer keep up with

the degree of invoicing they were used to. For the smaller firms, a focus strategy is suggested

as a «solution» to the challenges. The larger firms are better off with a differentiation strategy,

or even a low cost strategy.