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Article
Publication date: 2 April 2020

Benny Hutahayan

Analyze the importance of sustainable innovation strategy applied in manufacturing companies in Indonesia which affects the company's financial performance through several…

Abstract

Purpose

Analyze the importance of sustainable innovation strategy applied in manufacturing companies in Indonesia which affects the company's financial performance through several mediating variables.

Design/methodology/approach

The population in this research was medium and large manufacturing company business units in East Java. Business units are part of a company considered as the profit center. The business unit as the unit of analysis in this research is part of the organization that: (1) is responsible for the production and marketing of a product or set of products; (2) is formed by product type; (3) has its own competitors which are different from competitors of other business units or divisions within a parent company; (4) has a manager who is responsible and has authority over the planning and implementation of strategies to achieve the specified profit target.

Findings

Innovation strategy has a significant effect on financial performance. Human capital does not significantly mediate the relationship between innovation strategy and financial performance. Capital performance and internal performance do not mediate the relationship between innovation strategy and financial performance. Management accounting information system does not mediate the relationship between innovation strategy and financial performance. Internal process performance mediates the relationship between innovation strategy and financial performance. Management accounting information system and internal process performance mediate the relationship between innovation strategy and financial performance.

Originality/value

The difference in findings confirms that this research needs to be conducted. On the other hand, there is no research that has comprehensively tested the mediating effects of Human Capital and Management Accounting Information System in the relationship between Innovation Strategy and Internal Process Performance and the Impact on Corporate Financial Performance. The originality of this research can be seen in the use of contingency theory which narrows the gap between the industrial organization (I/O) paradigm and the resource-based view (RBV) regarding competitive advantage and performance. Specifically, this research introduces innovation strategy, human capital, management accounting information system, and internal business process performance as the contingency factors that affect financial performance. Second, empirically, this research tries to reduce the gap in empirical research by offering new research model and new research establishment at the level of strategic business units (SBU) in manufacturing companies in East Java. This research is expected to be useful for policy decision making, especially for managers who want to improve strategic business unit's financial performance.

Details

Benchmarking: An International Journal, vol. 27 no. 4
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 1 October 1999

George D. Thompson

Perceived increases in the proportion of human capital in the production mix are matched by calls for the development of methods of accounting for human capital. The term ‚Ä…

Abstract

Perceived increases in the proportion of human capital in the production mix are matched by calls for the development of methods of accounting for human capital. The term ‚Äúcapital‚ÄĚ is used in a range of academic and professional fields. Cultural capital is a term from sociology, closely related in meaning to human capital and human resources, but providing a unique perspective of its own. This paper suggests that, by reaching outside the traditional economic rationality of the discourse on human resources or human capital, cultural capital provides insights for accounting. In particular, it suggests that a form of human resource accounting based on cultural capital is needed to reflect the plural authority and accountability structures of organizations.

Details

Accounting, Auditing & Accountability Journal, vol. 12 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 29 June 2010

Ananda Samudhram, G. Sivalingam and Bala Shanmugam

The purpose of this paper is to discuss a framework of accounting theoretical bases that could promote research into little understood areas of human capital accounting.

Abstract

Purpose

The purpose of this paper is to discuss a framework of accounting theoretical bases that could promote research into little understood areas of human capital accounting.

Design/methodology/approach

The possible forces that hinder greater disclosure of human capital‚Äźbased information are analyzed by reviewing several theoretical viewpoints that offer a framework of different possible reasons for the low frequency of human capital‚Äźbased disclosures.

Findings

The paper explores several possible reasons for the reluctance of firms to disclose greater amounts of human capital‚Äźbased information, from the perspective of relevant theoretical bases. The predominant reasons may differ in different circumstances, industries and environments.

Research limitations/implications

The paper explores theoretical bases that explain the barriers to widespread reporting of human capital‚Äźbased information. The theoretical bases discussed are not empirically validated.

Practical implications

The validation of the theoretical bases explored in this study, and the possible uncovering of new bases in the future through empirical studies, will enable academics, policy makers and accounting standard setters to better understand the reasons for the limited disclosures of human capital‚Äźbased information by listed firms to capital markets. This will help in the promulgation of widely accepted accounting standards for the disclosure of human capital‚Äźbased information, which address and overcome the forces that currently hinder the reporting of human capital‚Äźbased information.

Originality/value

This is the first paper that explores a framework of several pertinent theoretical viewpoints that specifically address the non‚Äźdisclosures of human capital‚Äźbased information to capital markets.

Details

Journal of Human Resource Costing & Accounting, vol. 14 no. 2
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 1 January 1998

MIECZYSLAW DOBIJA

Progress in human resources accounting must continue to find a clear constructive definition of terms pertaining to human capital and human assets. The present paper is…

Abstract

Progress in human resources accounting must continue to find a clear constructive definition of terms pertaining to human capital and human assets. The present paper is comprised of considerations leading to the proposal of more general definitions of capital that involve human capital. As a complement to Fisher's concept of capital measurement, the present definition explains capital based on the capitalization process. Capitalization should be viewed as an essential attribute of capital. Human resources accounting (HRA) can benefit from improvements in the definition of certain terms related to human capital. Of particular importance is a proposal of a more general definition of capital. The definition leads to an alternative measure,which is more useful in the HRA field than the Lev‚ÄźSchwartz model. The proposed measure compliments Fisher's concept of capital measurement and utilizes a compound interest approach. Capital is perceived as a value of economic means capitalized in physical and human resources. The rate of capitalization is determined through natural and social conditions of the environment. The mode of capital measurement results from the above definitions. Moreover, the measure of human capital appears as a generalization of the historical cost concept. The valuation model of human capital involves capitalized costs of living, costs of professional education and value of experience measured by a slightly modified learning curve. Having human capital redefined and measured in these terms, we can introduce human resources into the balance sheet using a set of relevant journal entries.

Details

Journal of Human Resource Costing & Accounting, vol. 3 no. 1
Type: Research Article
ISSN: 1401-338X

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Book part
Publication date: 16 December 2016

Alexandre Rambaud and Jacques Richard

This chapter gives in ‚ÄúIntroduction to the Human Capital Issue‚ÄĚ a critical analysis of the standard (economic) Human Capital (HC) theory, with the help of some…

Abstract

Purpose

This chapter gives in ‚ÄúIntroduction to the Human Capital Issue‚ÄĚ a critical analysis of the standard (economic) Human Capital (HC) theory, with the help of some ‚Äútraditional‚ÄĚ (founding) accounting concepts. From this study, to avoid the accounting and social issues highlighted in ‚ÄúIntroduction to the Human Capital Issue,‚ÄĚ we present, in ‚ÄúThe ‚ÄúTriple Depreciation Line‚ÄĚ Model and the Human Capital,‚ÄĚ the ‚ÄúTriple Depreciation Line‚ÄĚ (TDL) accounting model, developed by Rambaud & Richard (2015b), and we apply it to ‚ÄúHC,‚ÄĚ but viewed as genuine accounting capital ‚Äď a matter of concern ‚Äď that firms have to protect and maintain.

Methodology/approach

From a critical review of literature on HC theory, from the origin of this concept to its connection with sustainable development, this chapter provides a conceptual discussion on this notion and on the differences/common points between capital and assets in accounting and economics. Then, it uses a normative accounting model (TDL), initially introduced to extend, in a consistent way, financial accounting to extra-financial issues.

Findings

This analysis shows at first that the standard (economic) HC theory is based on a (deliberate) confusion between assets and capital, in line with a standard economic perspective on capital. Therefore, this particular viewpoint implies: an accounting issue for reporting HC, because ‚Äútraditional‚ÄĚ accounting capital and assets are clearly isolated concepts; and a societal issue, because this confusion leads to the idea that HC does not mean that human beings are ‚Äúcapital‚ÄĚ (i.e., essential), or have to be maintained, even protected, for themselves. It only means that human beings are mere productive means. The application of the TDL model to an accounting redefinition of HC allows a discussion about some key issues involved in the notion of HC, including the difference between the standard and ‚Äúaccounting‚ÄĚ narratives on HC. Finally, this chapter presents some important consequences of this accounting model for HC: the disappearance of the concept of wage and the possibility of reporting repeated (or continuous) use of HC directly in the balance sheet.

Research implications

This chapter contributes to the literature on HC and in general on capital and assets, by stressing in particular some confusions and misunderstandings in these concepts. It fosters a cross-disciplinary approach of these issues, through economic, accounting, and sustainability viewpoints. This analysis also participates in the development of the TDL model and the research project associated. It finally proposes another perspective, more sustainable, on HC and HC reporting.

Social implications

The stakes of HC are important in today’s economics, accounting, and sustainable development. The different conceptualizations of HC, and the narratives behind it, may have deep social and corporate implications. In this context, this analysis provides a conceptual, and practicable, framework to develop a more sustainable concept of HC and to enhance working conditions, internal business relations, integrated reporting. As an outcome of these ideas, this chapter also questions the standard corporate governance models.

Originality/value

This chapter gives an original perspective on HC, and in general on the concept of capital, combining an economic and an accounting analysis. It also develops a new way to report HC, using an innovative integrated accounting model, the TDL model.

Details

Finance and Economy for Society: Integrating Sustainability
Type: Book
ISBN: 978-1-78635-509-6

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Article
Publication date: 2 October 2007

Filomena Antunes Brás and Lúcia Lima Rodrigues

This paper aims to analyse two competing approaches to accounting for a firm's investment in staff‚Äźtraining activities: the accounting and labour economics approach (which…

Abstract

Purpose

This paper aims to analyse two competing approaches to accounting for a firm's investment in staff‚Äźtraining activities: the accounting and labour economics approach (which argues that no asset should be recognized from training activity); and the human resources management approach (which advocates recognition of an asset).

Design/methodology/approach

A case study analysis was conducted in two large Portuguese companies where human capital is said to be a critical factor of firm success. The authors used document analysis and interviews to help understand the training phenomenon from a company's point of view. This meant knowing of motivations, training programme curricula, training practices and expected benefits of training.

Findings

The paper identifies and defines two situations concerning a firm's investment in human capital training: one, where no asset (value) is generated; and the other, where the accounting definition of an asset, requiring value generation, is satisfied.

Research limitations/implications

Case studies possess the strength of specific instance detail and interpretation, and the ostensible weakness of interpretation of a small sample. But such research can provide for a reframing of conceptual perspectives. They can stimulate additional efforts to improve accounting and financial reporting.

Practical implications

A guideline system for firm investment in training was developed. This system allows different accounting treatments of a firm's investment in training activity. It proceeds on the basis of perceptions of whether training activity undertaken by a firm generates, or does not generate, value.

Originality/value

This paper provides a much‚Äźneeded case‚Äźbased empirical analysis of accounting and human capital arguments, and asset recognition arguments. It clarifies the situations in which an asset should be regarded as being generated by training expenditure.

Details

Journal of Human Resource Costing & Accounting, vol. 11 no. 3
Type: Research Article
ISSN: 1401-338X

Keywords

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Article
Publication date: 1 March 2004

Hai Ming Chen and Ku Jun Lin

The purpose of this research is to deal with the human capital disclosure issue of present accounting systems. Many companies nowadays derive their competitive advantages…

Abstract

The purpose of this research is to deal with the human capital disclosure issue of present accounting systems. Many companies nowadays derive their competitive advantages mainly from human capital. However, under generally accepted accounting principles, all human‚Äźrelated expenditures are treated as expenses, which are deductions of revenues, thus misleading decision‚Äźmakers into inappropriate judgments. This paper provides an alternative way of measurement and disclosure of human capital items in financial statements. The paper defines and classifies the human capital of a company in line with a theoretical framework provided by the authors, sorts out company's human capital investments according to cost development stages in human resources, isolates human capital from expenses and finally suggests disclosure in financial statements.

Details

Journal of Intellectual Capital, vol. 5 no. 1
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 1 November 2011

Adam Steen, Denice Welch and Darcy McCormack

The purpose of this paper is to examine the differing perceptions or conceptualizations that have contributed to prevailing views held by accountants on the measurement…

Abstract

Purpose

The purpose of this paper is to examine the differing perceptions or conceptualizations that have contributed to prevailing views held by accountants on the measurement and reporting of human resources.

Design/methodology/approach

The study provides an analysis of extant literature and presents a theoretical framework on the relationship between HR, intellectual capital and goodwill.

Findings

The lack of traction in the progress of accounting for people is due to several factors including tension between employees and management, the demands of internal and external stakeholders, and the historic roots of accounting for labour.

Research limitations/implications

The paper provides suggestions as to how the debate regarding the valuing and reporting of human resources may be rekindled.

Originality/value

This study highlights the historical context for the lack of traction in the area of accounting for people, and the relatively recent development of the Intellectual Capital Statement as a partial but positive development in the area.

Details

Journal of Human Resource Costing & Accounting, vol. 15 no. 4
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 26 June 2009

Robin Roslender

The paper sets out to identify the key role that Jan‚ÄźErik Grojer's work on human resource costing and accounting played in linking initial developments in accounting for…

Abstract

Purpose

The paper sets out to identify the key role that Jan‚ÄźErik Grojer's work on human resource costing and accounting played in linking initial developments in accounting for people with the more recent advances associated with the emergence of the intellectual capital concept.

Design/methodology/approach

The paper is in the form of an essay that briefly considers the history of approaches to the challenge of accounting for people.

Findings

The recent developments associated with intellectual capital highlight the importance and value of adopting a rather wider conception of accounting for people.

Originality/value

The paper provides a provocative introduction to the topic of accounting for people and as such may be of value to both newcomers to the field and those who are simply intrigued by the idea itself.

Details

Journal of Human Resource Costing & Accounting, vol. 13 no. 2
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 1 January 2005

Herman A. Theeke

This paper seeks to present the positions and conclusions of scholars to support a proposition that the asset approach to human resource accounting has failed.

Abstract

Purpose

This paper seeks to present the positions and conclusions of scholars to support a proposition that the asset approach to human resource accounting has failed.

Design/methodology/approach

Reviews the history of human asset accounting.

Findings

The paper offers an alternative ‚Äúliability approach‚ÄĚ to account for and report human resources.

Originality/value

The paper provides an argument and rationale to demonstrate that a liability paradigm would be compatible with normal accounting and reporting procedures.

Details

Journal of Human Resource Costing & Accounting, vol. 9 no. 1
Type: Research Article
ISSN: 1401-338X

Keywords

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