Accounting for innovation paradoxes? A new typology for third wave economy

Abstract

The topic of accounting for innovation has been highly controversial in the accounting profession for many years. The building block of accounting has never been fully integrated into the innovation process, specifically, how to measure and report innovation initiatives. The accounting community still grapples with its concepts and paradoxes. This paper is about innovation accounting, it proposes a new typology with paradigms about how to absorb the paradoxes of innovation (value, growth and cash). Accordingly, an extensive review of literature was carried out to analyse failure of accounting to cope adequately with information requirements of new economy. A discussion highlights lacks of accounting model and pinpoints the controversies and contradictions implicit in different viewpoints. The research method is a deductive one that diagnoses the problems of current accounting practices related to innovation. The results suggest that restructuring reporting mechanism is more matching innovation necessities than updating or improving such mechanism. Further, the results show how accounting instruments have been obsolete and outdated as a result of innovation dynamics of the 21st century. However, it still remains to be seen how these innovative paradigms will match the innovation necessities of companies. Recommendations are proposed for new research directions in the field. Copyright 2016 Inderscience Enterprises Ltd.