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An exploratory study of digital disruption in the accounting profession through the lens of disruptive innovation theory

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posted on 2022-03-28, 16:27 authored by Tianyuan Feng
Digital Disruption is a term frequently used to describe the changes enabled by ICTs that will fundamentally transform the existing value proposition and business model across all industrial sectors, including professional services (Christensen et al., 2018; Vesti et al., 2017). For the accounting profession, digital disruption is a phenomenon shaping the breadth and depth of accounting services. It has generated extensive discussion as to whether it poses a threat or opportunity to the future role of professionals within the business domain. Despite its current and future impact on practitioner and firm alike, there has been scant academic research on disruptive innovation within an accounting context. This thesis examines the extent to which Information and CommunicationTechnologies (ICTs), and accounting software in particular, has digitally disrupted the accounting profession and professionals. This thesis seeks to address the deficiency and advance our understanding of Digital Disruption through the lens of disruptive innovation theory across three studies. Chapter 2 (Study 1) conducts a systematic literature review of prior studies on how ICTs impact the role of accounting professionals and professionalism and then evaluates the potential for Disruptive Innovation Theory to provide a lens by which to assess the impact of ICTs on the accounting profession. Results indicate that prior literature has identified “changes”in the employment role of accounting professionals from one of core technical accounting skills to a greater focus on IT knowledge and soft skills. However, research has proceeded without an underlying theoretical framework and Disruptive Innovation Theory can provide a basis upon which to understand digital disruption within the professional services market. Chapter 3 (Study 2) explores whether ICTs can be viewed as disruptive innovation to the accounting profession and to what extent, accounting professionals have identified and coped with digital disruption in their daily practice. Semi-structured interviews with 13 senior managers/CEO/CFO of firms, professional bodies and public sector organizations, who occupy key decision-making positions with respect to ICT strategy across firms, finds that disruption has yet to fully materialize, but that accounting professionals have learnt to collaborate with ICTs as tools to achieve high value services and adapt different strategies to enhance their capability to innovate. Chapter 4 (Study 3) examines the case of Xero Ltd, a New Zealand domiciled public accounting software company which has recently embedded AI technology into its cloud-based accounting software. The study explores its potential disruptiveness to accounting services within the SME market, and finds two waves of disruption. One being cloud-based accounting software that has become embedded within the mainstream accounting software market across the SME sector, and an emerging second wave involving the application of machine learning and artificial intelligence in accounting software. Whilst studies have been undertaken on the impact of technological changes on accounting practice, this thesis enriches accounting literature by focusing on its impact on the accounting profession and professionalism. Disruptive Innovation Theory (Christensen, 1997; Christensen & Raynor, 2003), allows this study to develop an understanding of 1) the disruptive potential of ICTs in the accounting profession, and 2) the extent to which accounting professionals have recognized the disruptive nature of ICTs in their offering and deliverance of professional services. This thesis concludes that from a theoretical perspective, ICTs have still not fully disrupted the accounting domain, but that disruption is ongoing as developments including artificial intelligence and machine learning continue to emerge as factors that have the potential to further shape accountants’ future responsibilities, skills and knowledge. Although often seen as a catchphrase to describe the technological challenges accounting professionals face in their daily work, a majority are still unaware that ‘digital disruption’ is not technology itself, but is instead what technology itself empowers, that being the commoditization of expert knowledge and access to it at a significantly lower price. However, accounting professionals hold advantages that ICTs do not, including social capital and notions of “trust” built upon human interaction between professionals and their clients; and a more synthesized, integrated and creative way of thinking that is difficult to replicate through AI (due to its current stage of technological advancement). Therefore, this thesis argues that whilst the accounting profession has experienced digital disruption to date through automation, its effects have largely been managed, and that its ability to cause further disruption is to a large degree dependent upon whether professionals fail to be both critical and creative thinkers, strategic in focus, and empathetic and adaptive toward the needs of customers.


Table of Contents

1. Introduction -- 2. Paper 1 : Data in search of a theory : understanding the potential of digital disruption in the accounting profession through a structured literature review -- 3. Paper 2 : Identifying and managing digital disruption in the accounting profession through disruptive innovation theory - a view from accounting professionals -- 4. Paper 3 : On cloud nine : a case study on the disruptive innovation effects of accounting software as a service in accounting domain -- 5. Conclusion -- 6. Full reference list -- 7. Appendices.


Bibliography: pages 154-169 Thesis by publication.

Awarding Institution

Macquarie University

Degree Type

Thesis PhD


PhD, Macquarie University, Macquarie Business School, Department of Accounting and Corporate Governance

Department, Centre or School

Department of Accounting and Corporate Governance

Year of Award


Principal Supervisor

Lorne Cummings

Additional Supervisor 1

Dale Tweedie


Copyright Tianyuan Feng 2019. Copyright disclaimer:




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