The Internal Audit Implementation Gap in Emerging Market Manufacturing Firms: A Configurational Analysis of South Africa and Bangladesh

This study investigates the persistent gap between formal internal audit adoption and substantive implementation effectiveness in manufacturing firms operating in emerging markets. Despite regulatory mandates and the 2024 Global Internal Audit Standards, many companies engage in symbolic compliance, establishing audit functions on paper while failing to achieve meaningful governance impact. Drawing on agency theory, institutional theory, the resource-based view, and contingency theory, this research employs fuzzy-set Qualitative Comparative Analysis (fsQCA) on a comparative sample of listed manufacturing firms from South Africa and Bangladesh. Analysis reveals three distinct configurational pathways associated with low implementation gaps, all anchored by strong internal audit resourcing. Conversely, high implementation gaps emerge from configurations characterised by weak regulatory enforcement combined with high ownership concentration and poor governance quality. The findings demonstrate that resource-related conditions serve as core factors, while regulatory enforcement operates as a peripheral condition, and asymmetrical relationships exist between conditions producing high versus low implementation gaps. The research contributes the first integrated multi-theoretical configurational framework to internal audit research in emerging markets, moving beyond single-country, linear regression approaches to identify equifinal causal pathways. Unlike prior studies that focus on internal audit effectiveness or use single-country designs, this research introduces and operationalises the concept of an implementation gap and examines its configurational determinants across two contrasting institutional contexts, demonstrating that the gap phenomenon is distinct from effectiveness and requires a configurational explanatory logic.