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Ahmed Ali Mohammad
19
SBE, Vol.20, No.1, 2017
ISSN 1818-1228
©Copyright 2017/College of Business and Economics,
Qatar University
be divided into: 1. the failure to master the
specialized
vocabulary
of
knowledge
management; and 2. the failure to reflect the
systematic process of knowledge management.
Understanding the logic which underlies the
knowledge management should not be a
professional judgement based, but broader in
scope and more specialized in nature.
According to the methodology of this paper, it
could be said that the advent of knowledge
management has shaken the recognition rules
and in consequence the relevance and reliability
of accounting information. The accounting
rules by its state qua have become outdated,
and no longer valid to absorb assets of
knowledge management. The treatments of
knowledge initiatives by the existed recognition
rules and practices have become inadequate.
However, ignoring knowledge assets as result
to rules of accounting (in particular, discovery
and learning of the value chain) contributes to
phenomena of information asymmetry of
accounting. The current situation of accounting
model facilitates the release of biased and even
fraudulent financial information. The tangible
recognition rules have been considered the
driving engine of the operational revenues.
Thus, emergence of knowledge business model
entails a new accounting recognition rules that
perfectly match necessities of knowledge
management. It could be said that “reinventing
the wheel” is urgent to cope with knowledge
assumptions. Accounting theory needs to
measure what is matter instead of how does
measurement matter is
?
Investigation of
accounting logic is needed, including the
effectiveness of measurement techniques,
timing of the measurement, and use of changing
reporting formats. The role of accounting is
imperative in articulating any shift for business
change. Accounting change and reform need to
address the conflicting issues with the
transformational
style
of
knowledge
management
.
The preference for “replacing”
over “improving” in accounting for knowledge
management means that the accountant’s
community has to deal with assumptions of
knowledge management seriously to develop a
new accounting model. This paper contends
that the extensive exploration of the various
dimensions of lacks and shortcomings is an
appropriate approach for judging validity of
accounting model. The narrowness of
accounting scope and recognition rules has
restricted the accounting change. Accordingly,
accounting has become outdated and no longer
valid to absorb recognition of the knowledge
management. This situation has driven the
financial reporting to be away from business
value. As consequences, gap of market value
has been increased and accounting lost its
direct influence on management decisions.
This gap has created what can be called value
paradox. It’s a concept of knowledge
management which compares knowledge
extraction to knowledge embodies (Boisot,
1998). It has emerged since the last two decades
because of the differences between accounting
and knowledge management in terms of
interests, measurement techniques, and
knowledge assets evaluation. This value
paradox is denying the role of accounting as a
communicator of business information. In
accounting, value paradox concept has taken
different context and applications. Initially,
knowledge management is eighty percent
about customers and culture changes
(Leibowitz, 1998). The practices of knowledge
are directly linked with organizational
performance and measured based on customer
loyalty, product differentiation, and operations
excellence (Zack
et al
., 2009). Generating new
knowledge is a key source of competitive
advantages and profit, while lack of knowledge
may lead to the failure (Mietlewski and
Walkowiak, 2007). The dynamic of knowledge
process was always the center of the theoretical
arguments. Knowledge management is a value