Ternary Capital Structure

In this occasional paper, I discuss the emergence of structural capital as the ternary equivalent to human and financial capital. The paper describes the current state of structural capital as part of a larger intellectual capital framework.

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About Vantage

Executives activate enterprise by vectoring human, financial, and structural capital resources through operating, investment, and financing decisions. The quantum resultant of these vectors is generally reported through proxy measures such as profitability, capability, capacity, market share, influence, and perspective. The ternary interrelationship of human, financial, and structural capital to their whole can be depicted influentially as shown below, and requires from management ever more advanced concepts and methods in order to achieve and sustain competitive advantage in the global marketplace. The stakes in these decisions are high. For individuals, such decisions generally affect financial freedom, which in turn leads to time and relationship freedom. Organizationally, they determine the fulfillment of stakeholder needs, wants, and expectations. The essence of enterprise lies within the topography of this framework.

Financial capital is the sum of the depreciation, amortization, depletion, rent, interest, and maintenance expenses associated with holding or using commoditized financial assets (both tangible and intangible). Human capital is the sum of wages, benefits, commissions, and other expenses associated with employing people (i.e., those who go home at night). Structural capital is what remains after accounting for the financial and human capital of the firm.

While the competition between financial and human capital has been the subject of classical and neoclassical economic debate, ad nauseam, it is the emerging recognition of structural capital as the ternary equivalent to these traditional capital forms that provides the vantage point for visualizing the topological landscape which stands guard before the vista of strategic success.

Patterns of Beauty in Finance

This is an occasional paper I released arguing that there is beauty in the patterns discovered by financial economists that transcends symbolism and nominalism in what only the mind can understand within its conceptual space.

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Towards Matching Profit to Principle: Pricing Matters

This is a short editorial essay I submitted to We > Me in March 2007, arguing that capitalism must seek to match profit to principle if the world community and global enterprise are to thrive together in our modern times.

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Critical Modeling Strategy

In this occasional paper, I promote critical thinking by modelers in finance and accounting. In particular, I argue that reliability and validity checks are integral to the business modeling process.

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New Approaches to Finance and Accounting

In this occasional paper, I discuss the issues affecting accounting reform from the perspective of the stakeholders, including investors, management, regulators, academia, and the accounting profession itself. My conclusions argue for future reforms in accounting and finance, irregardless of the untimely nature of such reforms on all stakeholders.

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