The impact of management accounting systems on intellectual capital in the social security organization

Accounting Department

Dissertation for M.A. »

Abstract

The purpose of this research is to investigate the relationship between management accounting systems and the development of intellectual capital in the social security organization. For this purpose, the relationship between the three criteria of how to use management accounting systems, the type of information provided by management accounting systems, and the type of decisions supported by management accounting systems with the components of intellectual capital, including human capital, structural capital, and customer capital, was investigated. The results of the analysis of the research hypotheses show that, in general, according to the test of correlation coefficients between the research variables, only four hypotheses were accepted out of the 12 hypotheses proposed, which are related to the relationship between the variables of how to use management accounting systems and human capital, the type of decisions supported by management accounting systems and structural capital, human capital and structural capital, and structural capital and customer capital. In all four hypotheses, the relationship between the variables is direct.

Key words: Management accounting systems, intellectual capital, social security organization

Introduction

The purpose of this chapter is to present the framework and outline of the research. After the introduction, the problem, importance and necessity of the research and the objectives of the research have been discussed. In the following, hypotheses and research methods will be presented.

From the point of view of financial accounting, capitals are classified into two categories: tangible (tangible) and intangible (intangible). Tangible assets and capital include all physical facilities such as land, buildings, and production equipment, but recognizing intangible capital is a vague thing for organizations. The concept of human capital is rooted in economic literature (Bekr, 1996). In fact, the quality characteristics of people are their capital. Human capital is neither physical capital nor financial capital, but human capital is defined as knowledge, skill, creativity and health of a person (Bekr, 2002).

The literature related to intellectual capital expresses the value and intangible nature of these resources. The first efforts related to the concepts of intellectual capital are due to Machlap's studies in 1962, but historically, the invention of the concept of intellectual capital is attributed to Galbraith in 1969. He believed that intellectual capital is something beyond the mind and includes intellectual action. This means that in the intellectual capital literature, in explaining the concept of intellectual capital, the movement from having knowledge to using knowledge refers to the point that relationships and processes, in order to be considered as intellectual capital, must transform knowledge into a product or service that is valuable for the organization, company, etc. Also, this leads to a process that takes us from having knowledge to using knowledge, which also leads to different definitions of intellectual capital. Edvinson and Malone say that intellectual capital is information and knowledge used to work, to create value (Vasil, 2008). Recently, researchers have provided a comprehensive definition of intellectual capital. In this definition, the necessary conditions for identifying this asset are also stated. "Intellectual capital is a type of asset that measures the ability of an economic enterprise to create wealth. This asset does not have an objective and physical nature and is an invisible asset that is obtained through the use of assets related to human resources, organizational performance and relationships outside the economic enterprise. All these characteristics create value within the organization, and the value obtained cannot be bought and sold because it is a completely internal phenomenon" (Ross and Baroness, 2005). Intellectual capital is born in the field of science and knowledge. This word is still used in its development period. Despite the fact that, more systems are using intellectual capital, but still many people working in organizations and economic enterprises do not know about this concept (Zanjirdar et al., 2017). Research results have shown that companies that have a higher level of control and focus on their intangible assets compared to companies that do not pay attention to these assets, especially intellectual capital, have better performance and return on investment, and the volatility of the stock prices of these companies has been lower (Bramhandkar, 2007)..

1-2- Statement of the problem

In the second half of the 20th century, with the development of information and the rapid advancement of technology, a huge transformation has been created in all aspects of human life and activities, which has caused a movement towards a knowledge-based economy and a change in the paradigm governing the industrial economy (Hemti et al., 2009). In such an atmosphere, knowledge and intangible assets are recognized as the most important source and competitive advantage of organizations. In fact, the world after the agricultural and industrial revolution in which land, capital and labor were the main resources is witnessing the information revolution in which the main resources are based on knowledge and information. In the age of knowledge, intellectual capital is an important issue, the correct management of which in today's turbulent and challenging environment is considered the key to the success of companies (Mojtahedzadeh, 2011).

One of the most important challenges and problems of traditional accounting systems is the lack of reflection of the value of intellectual capital in the financial statements and reports of business units. While today, the role of intellectual capital in creating value for companies and business units is much greater than the role played by financial capital in the units. Managers' awareness of the role of intangible assets such as intellectual capital in creating value for the organization requires accounting systems that measure and report the value of intellectual capital (Marr and Chatzkel, 2004; Thiels et al., 2007). In the meantime, the accounting profession and accountants play an important role in finding effective ways to control and measure intellectual capital through models and evaluation methods. Navas et al. (2012) also state that management accounting can be an effective method for organizational resources and describing its relevance for the value creation process in the organization. For this reason, it seems reasonable to consider management accounting as a complement to intellectual capital (Navas et al., 2012). Therefore, in this research, we will seek to investigate the relationship between management accounting systems and intellectual capital in the organization in order to clarify whether the management accounting systems and the information it provides have links with intellectual capital and whether it can help managers to better understand how intellectual capital creates value in the organization. Navin is oblivious and unable to measure the real value of assets in their calculations. In other words, financial statements have many limitations in describing the real value of companies. In today's knowledge-based societies, the return on intellectual capital used is much more important than the return on financial capital, which means that in the future, compared to intellectual capital, the role and importance of financial capital in determining sustainable profitability will be significantly reduced. This issue has created a gap between the real value of companies and organizations and what is applied in traditional accounting calculations. The widening gap between the real and book value of companies has attracted the attention of researchers to explain the invisible value that has been omitted from the financial statements. The value that is called as intellectual capital and is present in all aspects of the organization as a body of knowledge, but is ignored.

On the other hand, one of the information systems that can help the organization in measuring and using the intellectual capital correctly and optimally is management accounting. Management accounting, which had lost its value during the 20th century (Johnson and Kaplan, 1987), is now a perspective and a set of tools that has particularly expanded its fields and, as a result, is a good opportunity to deal with some direct or indirect challenges related to intellectual capital and its impact on the organization. Currently, the management accounting paradigm shows the effective management method of organizational resources and its relevance for the process of creating value in the organization. For this reason, it seems logical to consider management accounting as a complement to intellectual capital (Navas et al., 2012).

In the social security organization, like many other force-oriented organizations, human capital is one of the main success factors of the organization. Therefore, conducting research in this field is very important. In this study, we will examine the relationship between management accounting systems and human capital in the social security organization.