Wider still and wider? A critical discussion of intellectual capital recognition, measurement and control in a boundary theoretical context

This paper discusses intellectual capital (IC) accounting in the context of organisational boundary theory, building upon insights provided by Llewellyn [Llewellyn S. Managing the boundary. How accounting is implicated in maintaining the organisation. Accounting, Auditing and Accountability Journal 1994;7(4):4–23]. The impetus towards accounting, via recognition and measurement, or via description, for IC is examined from a boundary theoretical perspective, as it affects both financial reporting to parties outside the organisation and internal reporting in the form of management accounting. The notion of intellectual ‘capital’, as it has been developed so far, is criticised in this paper as an incomplete terminology that emphasises only certain aspects of intellectual assets, failing to take into account the ‘dark side’ of the asset base, intellectual liabilities or intellectual contingent liabilities. Further, the application of IC measurement in management control, and the creation and employment of IC metrics are criticised from an ethical standpoint. Clarification of the complex issues involved in IC accounting is offered by Grandori's (2000) proposal of a multiplicity of organisational boundaries, the related idea of a range of different accountability elements, and, ultimately, of a matching multiplicity of modes of accounting.