A study on intellectual capital, management accounting practices and corporate performance in six large Malaysian companies

Abstract

knowledge and information are prime commodities in today’s ‘knowledge-economy’ where economic enterprises are increasingly knowledge-based and technologically-driven. Knowledge firms have a large proportion of their investment in intangible assets, and this poses a real challenge both for financial and managerial accounting that traditionally have not adequately reflected the investment and performance of intangibles in financial statements. increasingly, however, it is being recognised that intangible assets and intellectual capital (IC) are the keys to attaining competitive advantage for knowledge firms (Segelod, 1998), especially in the world’s liberalised economy. knowledge-based assets are the foundation for success in the 21 st century. Wiig (1997) argues that knowledge and IC play a fundamental role within modern enterprises, many leading organisations, such as Skandia Insurance and Ernst &Young, have successfully managed knowledge and IC. Klein and Prusak (1994) define IC as “packaged useful knowledge”. Sullivan (2000) suggests that IC basically constitutes knowledge, lore, ideas, and innovations.