It is well known that firms following strategies such as “prospectors” (Miles and Snow 1978) and “product differentiation” (Porter 1980) need to be successful innovators in order to sustain their competitive advantage (Chenhall et al.

In total, these findings reveal that management accounting department can be part of the strategy implementation mechanism in firms that emphasize exploratory innovation. I find empirical support for the proposed three-path mediated effect using a structural equation model with survey data from 244 firms from German-speaking countries. Drawing on this evidence, I hypothesize that the relationship between differentiation strategy and exploratory innovation is mediated by two factors: a greater business partner orientation of management accountants and their subsequent use of the management accounting systems for attention focusing and decision making purposes. Separate streams of literature analyzed the relationship between strategy and the role of management accountants in firms and the relationship between the role of management accountants and new product innovation. This study contributes to understanding how firms pursuing differentiation strategy enhance exploratory innovation outcomes through business partner management accountants and their use of management accounting systems.

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