Identification of Operative Conditions for Calculating Devices

to enable processes of management, i.e. decisions about coordination and distribution of IC resources in remote operations.

In the table’s group 1, the global context, the possible elements conditioning IC mechanisms of coordination and distribution in dispersed contexts was reduced to one mechanism of

coordination, the “individual communication” (element no 5) (at a distance). The mechanism conditions and requires shared non-financial elements for comparisons across boundaries of supply and demand for HC in identical formats to be comparable. Furthermore coordination requires “systems of control” (Mintzberg’s element no 7) distributing digital formats able to visualize and value individual knowledge in and between firms.

In group 1, moreover, reviewing possible elements conditioning IC mechanisms of coordination in the company context, for the coordinating mechanism “direct supervision” (element no1) to happen remotely in dispersed firms, comparable outputs from processes applying, matching, developing and using individual knowledge has to be accessible and therefore distributed. For the coordinating mechanism “Standardization of work” (element no2) to happen standardization is represented in non-financial terms. Mintzberg’s coordination mechanism,” jobs” (element no6) is as a coordinating factor more doubtful, because the complex representation of knowledge and competence in packages in job descriptions restrains coordination and distribution of individual knowledge. Agility and innovation is thereby hampered, because individual knowledge is hidden in job descriptions and not accessible across structures and processes. Communication devices have in accessible digital formats explicitly to articulate the values required for the objects in an overview of knowledge objects.

Systems of accounting (element no7) are relevant as coordination and distribution mechanisms in the context when digital formats able to visualize and value objects of individual knowledge in and between firms have been designed and made accessible in a structure transferred to web technology enabling this distribution between units.

So, under the found conditions, organizational theory offers three possible elements of design for coordination of HC in IC, coordination mechanisms no1, no 5 and no 7 in the table, Annex 1.2.

In table’s group 2 reviewing possible design elements to visualize and value IC objects in mechanisms of distribution in the global context (2) an open system approach is induced which means that knowledge variables outside the firm may influence the design of structure (J. S.

Brown & Duguid, 1998; Donaldson, 1997).

The conditions for the mechanisms conditioning the elements of transfer of IC to technology for liaisons between entities to happen have global spans. Accounts of knowledge ex ante for the liaisons to be exchangeable between contexts 1 and 2 are ostensive without the existence of shared practices, communities and know how. Liaisons consist of individuals or groups of individuals determining the individual level of conceptualization. Both explicit and tacit knowledge resides in individuals. The global span conditions the elements of visualization of individual knowledge as objective objects. The ontological subjective view of knowledge (Nonaka et al., 2008) prevents knowledge from being recognized in unstructured contexts at a

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distance (Augier et al., 2001). The subjective view of knowledge is inapplicable in conceptualized context, because patterns of recognition differ between the conditions of

visualization and valuation of knowledge objects in the dispersed supply and demand situations.

Therefore, knowledge to be recognized and shared in generic secure, precise processes of exchange may rather be represented in objective objects.

Relative measurements (A. Hansen, 2009/2010) for values of knowledge are as a principle of design impossible in context 2 having no comparative operative entities.

Absolute measurements understood as a format without situation variables is viewed as a viable element of design (A. Hansen, 2009/2010). For mechanisms of liaisons designed as IC devices to add value in operations they are required to transcend the boundaries between context 1and 2 with the properties of boundary objects (Star & Griesemer, 1989). This identifies yet another element of design: The measurement method has to produce value representation including no criterion for values, only metrical scales that relate to observable phenomena.

The unstructured context has no business models, but offers technological spaces and accesses (The Internet) for supply and demand of individual knowledge which in the socio/technical interface between dispersed individuals (supply) and the demand entities (organizations) may inform about the type and the value of knowledge and competence in a market-like way. This happens in devices able to enter contexts 1 as calculative devices in systems of control.

Design elements therefore are conditioned by the coordination mechanism no 5 as well as technological formats in systems of control.

In context (1) the context is company-centered but the view is inapplicable, because situation variables from indispensable (recruitment, collaboration) individual knowledge objects permeate the context.

Devices of coordination connecting the contexts have to work in both contexts. Visualized knowledge devices flow from one context to the other denominating ex ante /ex post the values of the knowledge exchange which will or has happened.

Representations of knowledge designed for context 2 is applicable in context 1, because context 1 is part quantity of context 2. For coordination mechanisms as liaisons IC devices may add value in operations when transcending the boundaries between the contexts 1and 2 as boundary objects.

“Boundary objects are objects which are both plastic enough to adapt to local needs and the constraints of the several parties employing them, yet robust enough to maintain a common identity across sites. They are weakly structured in common use, and become strongly structured in

individual site use. These objects may be abstract or concrete. They have different meanings in different social worlds but their structure is common enough to more than one world to make them recognizable, a means of translation. The creation and management of boundary objects is a key process in developing and maintaining coherence across intersecting social worlds.” (Star &

Griesemer, 1989)

The measurement method therefore includes no criterion for values, but produces only metrical scales that relate to observable phenomena independently of time and space, i.e. location and use.

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For systems to be operated and create output the elements conditioning calculative devices which represent the nature and the value of individual knowledge at a distance must bring more value to the decision making in operations than the effort to operate the devices represents (O'Grady, Morlidge, & Rouse, 2013).

In the table’s group 3, in the global context (2), design elements in the coordinating mechanism no 7 “control systems” condition the design of objects as calculating devices in systems of accounting. In the unstructured contexts calculating selves may connect to visible IC devices in self-interest, if decisions and acting within the paradigm bring them benefits. Conditions for calculations to happen are individuals having access to:

1. a list of the possible states of the world 2. a possibility to rank these states of the world

3. a possibility to identify and describe actions that allow for the production of each of the possible states of the world

4. possibilities to compare costs

This list of requirements conditioning calculations from the economic paradigm is viewed through non-financial IC lenses understood as:

Ad1) Non-financial ostensive stocks providing overviews over classifications of explicit and tacit knowledge available in the context and relevant as comparable disclosures from individuals and companies documenting the capital (CV’s and annual reports).

Ad2) Out-put comparability is ordered as an element in design of system of accounting.

Ad3) Consistency (Fløstrand, 2006) is required between the documented output of HC values in operations. Accounting as methods of value reporting of balances and decisions about the movements of individual knowledge and competence may construct the IC value representation of flows/stocks in companies.

Ad4) For the socio/technical interface in unstructured contexts

managers/individuals act in self-interest when connecting to calculating devices.

Design elements substituting “Costs” therefore are required, because the notions of pricing and costs are economic constructs not included in the research context.

These properties have to satisfy the requirements 1-4 above for the concept to work.

In the company-centered context (1) devices connecting calculating selves in practices of management of IC like processes of allocation, accounting may have properties as calculating devices (Miller, 2001). Calculative devices may ex ante mediate distinguished processes as liaisons, recruitment and retention transcending the boundaries of contexts 1-2 coordinating the

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capital. As possible elements of design operations’ inputs and outputs configured by calculating IC devices will respect financial accounting logics designed to create rooms for mundane routines. Measured outcome from ICA is envisaged to motivate operational decisions and link managerial decisions and decision makers to traceable actions of (added) HC values in

operations, which could be digitalized in comparable digits. Managers’ talent to add value through coordination and distribution of IC may then become measurable. Traceable decisions in logics of accounting based on digital footprints may document operations as representation of IC values in flows and stocks.

Design elements for the socio/technical interface to connect to individuals will then rest on the individual drivers of self-interest, the properties in the calculating devices and the mundane routines and practices of IC management accounting.

Under the established premises the output from the above table proposes design elements that condition mechanisms able to visualize and value IC objects in order to take knowledge-based decisions in dispersed operations.

It shows why the widespread, prevailing knowledge ontology in the stream of KM literature is inapplicable for management of individually based knowledge in generic contexts. The subjective view of knowledge intermingled with competence(Nonaka et al., 2008) prevents knowledge from being recognized and trusted in unstructured contexts at a distance (Augier et al., 2001) which is conditioning control in the contexts. By submitting the conceptualization of knowledge to the properties of calculating devices its coordinating effect of mediations between the contexts (1-2) and between stocks and flows are furthermore assumed to happen. The output in this concept does not rest on subjectively chosen indicators or on the result of extrapolated backward looking surveys as in some scorecards’ approach measuring important interpreted indicators of strategy (Johnson, 1999), but on happened, individually IC motivated actions (clicks) decided during operations in routines coordinating the represented HC values in capital.

By accepting the premise that values and denominations of knowledge should be represented in both ostensive stocks and performative flows to satisfy accounting conditions found in and between companies, this also entails the premise that knowledge is dynamic over time (Kianto, Ritala, Spender, & Vanhala, 2014). Leaning against the mechanisms of coordination and distribution found in the material paradigm and identifying the design elements consistent with the immaterial contexts, the founding theoretical premise of IC calculations is adapted by providing conditions for the calculating self in terms of choices and standards satisfying the economic guidelines, conditions and logics of accounting and auditing.

Following this logic, when designing methods to objectify and value individual knowledge, IFRS is consulted. The standardizing guidelines describe and define an asset as “A resource controlled by an entity as a result of past events (a) and from which future economic benefits are expected to flow to the entity”. Applied into immateriality this guideline could say: “A

resource controlled by an entity represented as valued objects of knowledge and competence chosen by a manager as a result of educational and experience-based decisions and from which

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future economic benefits are expected to flow through its application to the work processes in the entity”.

This is considered as relevant, because the kind and value of knowledge and the kind and value of competence “Make a difference to the decisions of the user”. It has “predictive value “,

“confirmatory value” and “faithful representation” as – “complete, neutral and free from error”, because the calculative devices will be designed as objects which are objective (not subjective) denominated in generic classifications and neutrally valued as results of levels of educations or length of employment/ length of positions at the labor market, chapter 5. Neither interpretations nor estimations based on values will be part of the process transferring the values of individual knowledge and competence from the human to the structural capital.

It includes “a description of the nature of the asset, a numerical depiction of the asset, a

description of what the numerical depiction represents”. According to IFRS it is reliable when :

“Information has the quality of reliability when it is free from (material) error and bias and can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent”. “Comparability” is when the representation “enable users to identify and understand similarities in, and differences among, items”, “consistence” is when “use the same methods for the same items, either from period to period within a reporting entity or in a single period across entities”. The representation is “verifiable” when “different knowledgeable and independent observers could reach a consensus, not necessarily a complete agreement that a particular depiction is a faithful representation” and finally, according to IFRS it is “timely” when “information is available to decision makers in time to be capable of

influencing their decisions”. Furthermore it is “understandable”, when “classifying,

characterizing, and presenting information happens clearly and concisely “(Ernst & Young, 2012).

These conditioning elements from IFRS frame elements of design in the concept of IC, because strong critical voices claim that disclosures and statements in the IC domain lack

understandability, reliability and auditability preventing the financial markets to act and collaborate on non-financial disclosures. Comparability in IC disclosures would be desirable.

None or few calculating regimes with consistency between decisions in IC operations and value representations in accounting understood as stocks and balances showing movements in the underlying resources are provided (Fløstrand, 2006) within or between units, to my knowledge.

The principles of consistency are requirements for causality between the managerial decisions and the value adding effects and they lack transparency and understandability (Andon et al., 2015).

On this node about comparability and auditability, the mechanisms of coordination and

distribution in the material paradigm of operations is left in favor of a comparison between the two valuing paradigms, the existing economic paradigm and the conceptualizing thoughts about possible methods of valuing in the non-financial paradigm represented by IC.

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