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TOWARDS AMETA THEORY OFACCOUNTING FOR KNOWLEDGE MANAGEMENT: REVIEW THE
REALITIES TO STAGE THE CRITICAL THINKING OF KNOWLEDGE BUSINESS MODEL
SBE, Vol.20, No.1, 2017
ISSN 1818-1228
©Copyright 2017/College of Business and Economics,
Qatar University
1997; Nonaka and Takeuchi, 1995; Davenport
and Prusak, 1998). According to Wiig (1997),
the company’s viability depends highly on
“the competitive quality of its knowledge
based intellectual capital and assets and the
successful applications of these assets in its
operational activities to realize their value to
fulfil the company’s objectives”. Through this
era, the concept of intellectual capital has been
used for the first time instead of the accounting
term intangible assets (Edvinsson and Malone,
1997). The problem which has been highly
recognized is how to report intellectual
assets in systematic way in the absence of
accepted accounting measurement methods
and guidance of regulatory setters (Brennan,
2001). Knowledge research has been plagued
by a variety of the accounting problems that
can lead one to question the extent of validity
of accounting model. In fact, this model looks
backwards and focuses on tangible assets.
Tangible (or hard) assets have considered
driving engine of the industrial revenues such
as physical capital, fixed assets and inventory
(the assets of the industrial revolution). It is
a transaction-based evaluation model. This
has led a number of practitioners to inquire
into the lacks that are specific to knowledge
nature. In addition, in view of the growing
emphasis on knowledge management and
the related accounting problems, the urgent
differentiation between accounting capital and
flow of intellectual capital has been addressed
(Corrado
et al
., 2006). This a new theoretical
perspective was necessary for analyzing
revenue power of knowledge companies,
because most of the accountant’s community
thinks that sale of inventory is more important
than development of products. Accordingly,
the interdisciplinary literatures analysis
has indicated that knowledge-intensive
companies have three major accounting-
related problems: partial excludability;
inherent risk; non-tradability (
Lambe, 2002)
.
According to the knowledge literatures, the
problem of accounting against knowledge has
two dimensions: the first is the asset (whether
financial, technological, or intellectual)
cannot be well determined . Further, the
measurement of the critical success factors of
knowledge business model cannot be defined
in qualitative and quantitative terms (Hall and
Mairesse, 2006). The accounting literatures
have classified the knowledge critics against
accounting into structural and contextual.
The structural critics are related to the rigid
reporting format of financial statements. In
contrast, the contextual critics have discussed
the practical aspects of accounting in terms
of rules, regulations, and assumptions. The
literatures reviewed indicate that the reporting
power of financial statements is full of
controversy associated with outdated reporting
style of financial statements (Canibano
et al
.,
2000). The critics against reporting power have
been allocated to accounting equation that
has undermined the comprehensive reporting
power of accounting. The underlying debate has
created huge controversy on how to reconcile
the reporting power to match the priorities of
the knowledge management (Canibano
et al
.,
2000). The monetary-based nature has to be
overcome because very little of knowledge
has to do with money. The distinctive debate
about knowledge problems of accounting has
concluded that the priorities of knowledge
management still cannot be disclosed in
general-purpose financial statements (Hall
and Mairesse, 2006). The reality is the serious
problem of accounting is laid in its theoretical
rules and reporting formats. This matter has
received much attention in the literature, often
in the form of discussions around validity of
accounting model. Accounting rules are key
cause beyond accounting model’s failure. As
set of these rules were set up to evaluate hard
or (tangible) assets. The accounting standards
either IFRS or GAAP recognize and report