Firms are now relying on intangible resources to support their competitive advantage (Lev, 2001).
In fact, some firms are becoming virtual organizations with only human capital contained within the
nucleus of the firm itself (Wallman, 1995). With these changes in business practices and strategic intent,
management accounting questions become, “How does one align the reliance on an intangible asset not
captured in the financial statements with the measures that comprise an executive’s bonus compensation?”
and “How do human resource practices affect the use of non-financial performance measures in bonus
compensation?”