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Journal International of Accounting Information Systems 3 (2002) 17 34 Discussion of an ontological analysis of the economic primitives of the extended-REA enterprise information architecture James C. Lampe* Department of Accounting, Texas Tech University, COBA-MS2101, Lubbock, TX 79409, USA Received 10 May 2001; received in revised form 21 May 2001; accepted 23 May 2001 1. Introduction The Geerts and McCarthy paper (G/M) in this issue extends the original REA model (McCarthy, 1979, 1982) by adding type and commitment dimensions to the original REA model and analyzing the extended model from the ontological perspective of John Sowa (1999). G/M provide representations of the original REA model and expanded REAC in Figs. 1 and 2. Alternative representations model are provided in Exhibit 1 of this response. Discussion of the expanded components will be continued throughout the response to the G/M paper. The Expanded-REAC model and ontological analysis have the potential of providing a sound theoretical basis for a comprehensive interenterprise information architecture. This theory could provide substantial benefit to the research design, development, and implementation of ERP systems intended to interact and share information with partners in a business-to-business e-commerce environment. Despite the great theoretical contribution potential, the current G/M research paper under review has multiple problems that could mislead future research and hinder development of interenterprise systems. Problems to be discussed include: 1. inconsistent and confusing terminology, 2. erroneous ontological analyses and discussion, and 3. inadequate and incomplete application to REAC components. * Tel.: +1-806-742-3168; fax: +1-806-742-2099. E-mail address: jlange@ba.ttu.edu (J.C. Lampe). 1467-0895/02/$ see front matter D 2002 Elsevier Science Inc. All rights reserved. PII: S 1 4 6 7 - 0 8 9 5 ( 0 1 ) 0 0 0 2 1 - 5 18 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 Exhibit 1. Original REA and extended REAC models. Before meaningful discussion of these problems is feasible, further development of the interenterprise information system needs and ontological terminology is first necessary. The remainder of this response will contain major sections for: (1) interenterprise systems, (2) ontological concepts, (3) terminology problems, (4) erroneous analyses, and (5) incomplete application. 2. Interenterprise systems Fundamental concepts for successfully linking multiple enterprise-wide systems are fuzzy at best and often treated differently by many AIS researchers and developers. Some such concepts include: subsystem, portal, module, interface, coupling, hierarchy, schema, cohesion, structure, open system, value chain, and environment. When systems researchers and developers lack rigorous and agreed upon definitions of such concepts, the quality and speed of advances are hindered. The problem of fuzzy concepts with multiple applications concepts and interpretations of those concepts (opposed to rigorous and agreed-upon) is geometrically expanded when multiple organizations wish to share data in some type of partnering arrangement. Different machines configurations, ERP system vendors, operating process, personnel, and objectives all lead different organizations to create widely varying database J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 19 structures. In an interenterprise environment, a first necessary step is a standard, consistent, agreed-upon, and sound data structure based on common categorizing of shared data. The importance of a rigorous agreed-upon theoretical basis for development is properly emphasized by the Sowa quote referenced by G/M, The first step in designing a database, a knowledge base, or an object oriented systems is to select proper ontological categories. . . (Sowa, 1999, p. 51). In order to provide a basis for greater specificity and rigor in future discussions, a very simple interenterprise information system model is presented for purposes of this response. The primary organization is a manufacturing company (Company A) that has partnered with customers (Company B) and suppliers (Company C). A just-in-time inventory system exists to interface with customer orders and supplier shipments so that when a sales order is received from Customer B, a purchase order is placed to the appropriate Supplier C. A brief schematic of the enterprise relationships is illustrated in Exhibit 2. The easily stated, but rarely achieved, concept is to develop an interenterprise data structure such that Companies A, B, and C can all directly share (send and retrieve) information necessary to complete all the events appropriate to this value chain. If a standard data structure were common to Companies A, B, and C, the necessary sharing of data and processing would be greatly simplified and improved. Furthermore, the same theoretically sound data structure shared by Companies A, B, and C could also be shared by others: customers, suppliers, shipping entities, contractors, and other business-related partners associated with the Company A value chain. The entire system data/information needs for all Company A events and all interactions with all partners is called the interenterprise information architecture and will subsequently be referred to as the data microworld for Company A. Exhibit 2. Interenterprise relationships. 20 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 The stated goal of the G/M paper (Introduction) is to develop and analyze the extended REAC model as a domain ontology for business enterprises i.e., to develop a common categorization to properly reflect the business concepts, rules, entrepreneurial logic, and accounting conventions of a business and all the interconnected organizations partnering with that business. The implied assertion is that application of John Sowa s ontological analysis to the expanded REAC model provides a viable starting theoretical model for the information architecture of defined interenterprise microworlds. The reviewer believes this assertion is attainable, and recognizes the importance of such a seminal model for future research and practical development of interenterprise systems. If, however, future researchers, developers, and users of interenterprise data structures are to meaningfully extract data representative of the real world, consensus must exist as to the economic primitives of the extended-REAC enterprise information architecture. Hence, the precision and clarity of the seminal and theoretical model are critical to future success. Before discussing the application of ontological analysis to the expanded REAC model, a more extensive discussion of ontological terminology and logic is necessary to assess the precision of the G/M analysis. 3. Ontological analyses 3.1. Background Metaphysics is set of reasoning that makes sense of observations by generating a comprehensive and cohesive framework of abstractions. Two major branches of metaphysics are epistemology and ontology. Epistemology deals with the theory of nature and grounds of knowledge. Ontology is the study of existence all the things that make up the world (universe). This subsection provides a brief history of centuries of work leading up to the ontological classifications used by Sowa (1999) and the analysis applied to the expanded REAC model in the G/M paper. Ontology has been a subject of study for thousands of years. Philosopher Willard Van Orman Quine expressed the fundamental question of ontology simply as: What is there? The simple one word answer given is everything. To explain this further, Quine states To be is to be the value of a quantified variable. This can be noted as 9x representing the phase there is something x so that. . . In the sixth century BC, Greek philosopher Heraclitus noted the distinction between tangible objects and intangible information structures further noting that all things flow. A basis is that all things (represented by T) come into being from a cited source or logos. Fragments of this initial source of all things are also found in biblical Greek (St. John), Buddha, Confucius, and Lao-tzu writings referencing logos or the equivalent. Later, Plato proposed unchanging mathematical intangible forms/ideas as true realty reflected in the illusory flow of physical things. Aristotle accepted Plato s dichotomy, but reversed emphasis with the physical worlds as ultimate reality and intangible abstractions being derived from sensory experience. In the Categories (first treatise in Aristotle s collected works), 10 basic categories are presented for classifying anything that may be predicted about anything. Kant, in the 18th century, challenged Aristotle s system of categories. Kant J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 21 proposed an alternative scheme of all things in a table of four judgements (quantity, quality, relation, and modality) with three subgroups (trends) in each. German philosophers who followed Kant attempted to provide deeper explanation of Kant s triadic patterns. An example is that the triadic completeness is similar to: (1) thesis, (2) antithesis, and (3) synthesis. Pierce, in the late nineteenth century, further analyzed the triads and proposed three more basic categories referred to as Firstness, Secondness, and Thirdness as referenced in the G/M paper. An alternative and more precise definition of Pierce s triad (Sowa, 1999, p. 61) is: The first can be defined by a monadic predicate P(x), which describes an entity x by its inherent qualities, independent of anything external to x. The second requires a dyadic relation R(x,y), which describes some reaction between an entity x and an independent entity y. The third requires an irreducible triadic relation M(x,y,z), which describes how an entity x mediates two other entities y and z. Husserl was a mathematician who, in the 19th century, first referred to ontological investigations and developed a mathematical logic of ideal content with Greek words exceptionally close to Pierce s Firstness, Secondness, and Thirdness. Alfred North Whitehead combined the insights of the previously mentioned philosophers and used the same terms as those in the John Sowa materials used as the basis for analysis in the G/M paper. Another contemporary of Sowa who has written and lectured on ontological theory is Bunge (1977, 1979). Bunge (1979) provides a more detailed review of how ontology is related to several types of system models (engineering, physiology, biology, architecture, cybernetics, and general systems theory) that have been proposed. Similar to Sowa and the other referenced philosophers who have contributed to the development of ontological theory, Bunge notes the elementary notion of a formal system as a thing (T). In the same way Sowa defines states of secondness (relative) and thirdness (mediating) in terms of combinations of things defined in prior levels, Bunge discusses the higher levels in terms of couplings. In these couplings, if a coupling is feasible and allowed, it is referred to as a lawful state space. When a coupling (combination) of model components is not allowed, Bunge refers to it as an unlawful state space. 3.2. Ontological terminology and representation The previous section on this background of ontology emphasizes the importance of consistent and precise terminology to represent categorical classifications. If the complete set of all things that exist (T) in a world or microworld are to be classified in 12 categories (as suggested by Sowa and illustrated in G/M Exhibit 4), then the definitions of each category must be complete and precisely understood by all those using the classification (grouping) scheme. Furthermore, past the first level of independent items, it must be recognized that each category represents a combination (coupling) of previously defined items. The words used as the title to each category (grouping) are the end result of many different philosophers, over several centuries, using several different languages to describe a category. The English dictionary definition of the word hopefully promotes some understanding of each category, but does not define the precise ontological categorization necessary. When such titles are used 22 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 in a technical reserved word conceptual sense, the word or title has both connotative and denotative aspects (Bagranoff and Houghton, 1999). The connotative aspect of a conceptual word title generates an emotional impact on the user and association with experiences for decision-making. The denotative aspect is a specific literal definition for the technical purpose of the title. In the ontological analysis of the G/M paper, it is critical to place primary emphasis on the denotative aspect of categorical titles and secondary emphasis on the connotations of the words. According to the dictionary, a check that is written exceptionally neatly, for a very large amount, or on very beautiful paper could be called an outstanding check and meet the connotative aspect of the term. Professional accountants, however, have a special, or reserved, denotation associated with outstanding checks and could be misled if another literal definition were used. In the same way, a formal ontological classification structure could be rendered meaningless if different users applied varying English connotations rather than a precise technical ontologically reserved denotation of each category. For example, schema is ontologically defined as an independent abstract form taken as a continuant. An IT specialist in database applies a very different technical and literal definition of schema when designing a DBMS. When ontological analysis is extended to interenterprise information structures including databases for each partner entity, extreme care must be taken to use the term schema appropriately in each context. The remainder of this section is devoted to developing and defining each of the major ontological category titles, proposed by Sowa and used in the G/M paper and summarized in G/M Fig. 4. G/M explain that the 12 main ontology categories are the result of factoring 2 2 3 facets: physical ( p) vs. abstract (a), continuant (c) vs. occurrent (o), and firstness [independent (i)] vs. secondness [relative (r)], vs. thirdness [mediating (m)]. It should be noted that each ontological facet is represented by lowercase italicized and bolded letters. Each of the 12 categories is technically denoted by a combination of one factor from each of the three facets. For example, the ontology category title of Object is a combination of Independent (i), Physical ( p) and Continuant (c) factors from the three facets. To emphasize the technical denotation of the 12 ontological categories, the remainder of this response will italicize the words and parenthetically provide the facet combinations i.e., Object (ipc). For greater clarity and subsequent distinction, the extended REAC model components will be represented by uppercase letters. Resources (R) Events (E) Agents (A) Commitments (C) A starting point of defining the 12 (2 2 3) ontological categories is to reemphasize that all information within a given interenterprise microworld is represented by the symbol T. The J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 23 three facets of the ontological categories are represented in panel a of Exhibit 3. This is alternatively stated as: All things in the information microworld (T) can be dichotomized as physical (p) vs. abstract (a). All things in the information microworld (T) can alternatively be dichotomized as continuant (c) vs. occurrent (o). All things in the information microworld (T) fit into the triad of independent (i) vs. relative (r) vs. mediating (m). The 12 (2 2 3 factorial) ontological categories are the result of combining or grouping the three facets and represent all possible information wants and needs. Alternatively, no information within the microworld can exist without fitting into one of 12 categories. When all entities in the value chain of an interenterprise model use the same information categories, all information is classified similarly for processing within and between enterprises. 3.3. Firstness (independent) categories Panel b of Exhibit 3 represents an intermediate combination of the physical (p) vs. abstract (a) facet with the independent (i) vs. relative (r) vs. mediating (m) facet. This intermediate grouping of items is not discussed in the G/M paper, but is helpful in explaining how the 12 total categories (2 2 3) are developed and represented in panel c of Exhibit 3. The 12 ontological categories illustrated in Exhibit 3c are identical to those in Fig. 4 of the G/M paper and can be referenced to better define each individual category. Exhibit 4 presents the 12 reorganized ontological categories with annotation and examples to better define what components of an information microworld fit into each category. The discussion that follows provides verbal descriptions in the same order. Independent items in the structure can be described as a monadic predicate i.e., affirmed or denied without regard to anything external to the independent item. Independent physical items are referred to as actualities (i, p) while abstract items are called forms (i, a). Another way of stating independence is that the item is defined alone and does not inherit any additional meaning by being combined with other items. In Exhibit 4, four independent categories are represented as a combination of all three facets with emphasis beginning on independence. Readers are reminded that the literal denotation of the four independent items is not the word used as a title, but rather the combination of an item from the physical (p) vs. abstract (a) facet with another item from the continuant (c) vs. occurrent (o) facet all considered within the framework of firstness [independent (i)] items: Object (ipc) is any individual actuality (ip) considered as a continuant (c). An REAC example would be a building or other asset that is recognized as remaining stable over the relevant time period of annual financial statements. Process (ipo) is any individual actuality (ip) considered as an occurrent (o). An REAC example would be a sales event that occurs and is over the moment the sale is concluded 24 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 Exhibit 3. (a) Three top-level ontological categories. (b) Two combined ontological categories. (c) Three combined ontological categories. J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 25 Exhibit 4. Denoted and annotated ontological categories. long before the end of a fiscal reporting period. It should be noted, however, that the same item could be viewed as both continuant (stable) and occurrent (dynamic) when using different time periods. The building used as an example of continuant for the annual reporting period would also serve as an example of an occurrent if the relevant time period were the entire life of the enterprise. Schema (iac) is a form (ia) that has the structure of a continuant (c). An REAC example would be the coding of a type of data (12-31-00 current assets) into a hierarchical database that will not change over the time period of consideration. Script (iao) is a form (ia) that has the structure of an occurrent (o). An REAC example would be dynamic interactive computer program. 3.4. Secondness (relative) categories Relative (r) categories are representations of dyadic predicates i.e., how two items are related when neither individual item describes the complete relationship a physical (p) relative (r) is called a prehension (rp) prehending one item to another prehended item. An abstract (a) relative (r) is called a proposition (ra) that relates one form (ia) to another form (ia,) or actuality (ip,). Secondness category titles are again a 2 2 combination of the other facets considered within the framework of secondness [relative (r) combinations of forms (ia) with other forms (ia) or actualities (ip)]. Juncture (rpc) is a prehension (rp) considered as a continuant (c) over the time period considered appropriate. This relates an Object (ipc) in a stable relationship to 26 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 another stable prehended item. An REAC model example would be the combination of fixed assets representing total fixed assets in a balance sheet constant over the time period of evaluation. Participation (rpo) is a prehension (rp) considered as an occurrent (o) that changes rapidly during the time period under consideration. This relates a Process (ipo) in a dynamic relationship with another dynamic prehendered item. An REAC example is an ever-changing line of credit available based on recurring borrowing and payment events within a given time period under consideration. Description (rac) is a proposition (ra) about a continuant (c) that relates a Schema (iac) as a characterization of another continuant. An REAC example is the relationship of current assets to current liabilities providing a measure of liquidity held constant over the given time period. History (rao) is a proposition (ra) about an occurrent (o) that relates a Script (iao) as a characterization of the occurrent. It is reemphasized that the ontological category title history is merely a combination of a Script (iao) with another occurrent. In the REAC model, history will often deal with future estimates rather than an English connotation that would lead a person to believe history is associated with past actual facts. A specific REAC example would be a dynamic interactive computer program used by a manager to daily revise estimates of predicted future production, sales, and expense. 3.5. Thirdness (mediating) categories Mediating (m) categories in the ontological classification scheme are comprised of triadic combinations or groupings. In the same way that a secondness level relative describes the dyadic relationship of a level one firstness category item to another compatible item, the thirdness mediating categories explain why a secondness level relative (r) is grouped with a third item in an irreducible triadic relationship. The physical (p) example in Exhibit 4 illustrates that the plan x (a secondness relationship of marks on a paper to represent a building) guides the builder (y) to construct the physical building (z). The triadic relationship (x, y, z) could not be expressed by any combination of dyadic or monadic predicates. No combined sets of drawings (secondness items) can represent that the reason (a thirdness item) is to guide a builder in construction of a physical building. Instead, the triadic relationship is required. The completeness of the 12-category ontological classification scheme is that all other relationships can be represented by additional combinations of firstness, secondness, and/or thirdness categories. Four possible thirdness [mediating (m)] categories are devised from the 2 2 factorial combination of other facets: Structure (mpc) is a nexus (np) considered as a continuant (c) for some reason (mac) that explains how the structures (rpc) of its components are organized for some specific function or to accomplish given enterprise objectives. The mediating (m) aspect of the structure (mpc) is the reason (mac) why the secondness level juncture (rpc) is being combined with other continuants (c). The starting emphasis is the secondness Juncture J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 27 (rpc) in combination with another Juncture (rpc) and or Object (ipc) for a specific Reason (mac). All three components [Juncture 1 (rpc), Juncture 2 (rpc) or Object (ipc), and specific Reason (mac)] are necessary. A Structure (mpc) cannot exist without a Reason (mac). An REAC example is total fixed assets for a period being compared with production for that period in order to measure operating efficiency. Situation (mpo) is a nexus (mp) considered as an occurrent (o) for a given purpose (mao). The mediating (m) aspect of the Situation (mpo) is the Purpose (mao) for combining a secondness level Participation (rpo) with another occurrent (o). The triadic relationship begins with Participation (rpo) being with combined another occurrent (o) for a given Purpose (mao). A Situation (mpo) cannot exist without a Purpose (mao). An REAC example is how the daily liquidity measures of an entity affect the shipping decisions of a supplier partner. Reason (mac) is an intention (ma) of an enterprise concerning some continuant (c). A Reason (mac) goes beyond a secondness level Description (rac) to explain why a relationship of continuants (c) is relevant to the ongoing attributes of an enterprise. An REAC model example is why annual net income is important to the ongoing relationship between the enterprise and a supplies partner. Purpose (mao) is an intention (ma) of an enterprise that determines the interaction of a situation (mpo). The purpose (mao) extends beyond secondness level history (rao) to explain why relationships among occurrents (o) exist for the objectives of an enterprise. An REAC model example is why continuous monitoring of controls over inventory transfers is necessary to profitable operations of an enterprise. 4. Terminology problems in the G/M analysis The preceding background and definition sections now present the basis for a more meaningful critique of the G/M paper. It can be easily noted that the ontological classification is certainly not a new topic. The reader should further note that ontological analysis applied to information system development is not seminal with the G/M paper. Other AIS researchers have previously presented ontological analyses of accounting systems (Wand and Weber, 1990; Weber, 1997). The tremendous potential contribution of ontological analysis of the extended REAC model is that a totally comprehensive and theoretically sound model of information architecture for all participants in an interenterprise value chain is proposed. Future academic research and practical development of interenterprise systems could be based on a relatively simple 12-category classification system. The critical aspect of future research and development is that researchers, developers, and users must have consensus on the terminology of the 12 categories and the REAC components within each of the 12 ontological categories. Unfortunately, the G/M paper under review contains some inconsistent and/or confusing terminology that hinders rather than promotes consensus. Terminology in the G/M paper references prior REA model primitives and extends this established model with new terms for basic components of commitment images and type 28 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 images. Twenty-two new REAC model relationships (association, custody, linkage, segmentation, accountability, executes, involvement, reciprocal, reserved, assignments, partnering, configuration, responsibility, exchange, conversion, contracting, scheduling, policy, substitutability, complementarity, standardization, and strategy) are introduced in the G/M paper under review. The 12 ontological categories used as the primary ontological analysis in the G/M paper have been defined more completely in the preceding section of this response. Three new terms for ontological subcategories or subgroupings (typification, characterization, and scenario) are introduced in the G/M paper but are not subsets specified by Sowa (1999). Confusing or conflicting statements are made concerning several of these new terms introduced in the G/M paper and few are defined with sufficient precision to permit the desired follow-up by additional academic research or practical interenterprise system development. Potential problems with each of the newly introduced terms and potentially viable definitions when feasible area as follows: Commitment is first defined as an REA ontological category and further explained as an obligation to trading partners. This statement is confusing because commitment is an extended component of the REAC model, but not an ontological category like the 12 comprehensive categories that serve as the primary analytical basis of the G/M paper. The logical deduction from ontological completeness would also imply that commitment also applies to internal agents as well as external agents via partnering. Thus, commitment is neither an ontological category nor restricted to partnering. Furthermore, partnering is used as an ontological reserved word for a thirdness level Structure (mpc) relationship. It is unclear whether partnering in the above quote is used in the ontological denotative or English connotative context. To better clarify the major new components of the expanded REAC model, a definition to parallel the other REA components of resources, events, and agents is here proposed as: commitment images are a class of phenomena that reflect encumbrances of economic resources by agents for a future stock flow. Type images are introduced in Fig. 2, illustrated in Fig. 3, and referenced throughout the G/M paper as extended components of the REAC model fit to the Sowa 12-category classification scheme. Type images are not specifically defined anywhere within the G/M paper. A reference is made to Geerts and McCarthy (1994), but the term is not defined or even mentioned in the 1994 G/M paper either. A potential definition here proposed is: type images are abstract characterizations1 of the corresponding physical images. 4.1. Firstness level terminology problems Association (A A) is proposed by G/M as a new REAC relationship fitting into the ontological category of Juncture (rpc). No definition of association (A A) is provided. Instead, an example of association (A A) relationship between salesperson and customer is presented. The G/M paper further states that the original REA model responsibility relation- 1 Please note that characterization is being used in normal English word usage and not as an ontological reserved word. J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 29 ship (between two internal agents) is now a subtype of association and that omission analysis allows identification of two additional primitives Assignment and Alliance. This reviewer does not understand how the primitives have been identified, what they are, or how they are related to the other primitives of the model. Neither Assignment nor Alliance are defined or even mentioned in the Geerts and McCarthy (2000a,b) citation. Two additional Juncture (rpc) relationships of Custody (A R) and Linkage (R R) remain similarly undefined. A potential general definition proposed here is: association (A A) is a Juncture (rpc) relationship between internal agents and/or associated external agents. Accountability (E A) is used by G/M as a binary substitution of the original ternary or triadic control relationship in the REA model (McCarthy, 1982). In the paper under review, accountability (E A) is further described as being a relationship between an event and either an internal or external agent. The omission of a triadic Control relationship is considered a noteworthy departure from the original REA model (McCarthy 1979, 1982) that is not completely replaced by the accountability term. In its original form, Control was a relationship between the Economic Unit that had been described as a subset of internal agents or in ontological terms of a secondness level Juncture (rpc). Control was defined as a three-way relationship between a unit (internal agents), an event (increment/decrement), and an external agent with an intent to control resources. The Control relationship was defined and described as more than just an Association (A A) as described in the G/M paper under review. The original paper (McCarthy, 1982) identified accountability2 and Control as related but different concepts. Executes (C E) is a newly introduced relationship of the Participation (rpo) category. The example given for the Executes (C E) relationship is order sale. Although not stated in the G/M paper, it is assumed that this example implies the relationship that an order in time period (n) is associated with a sale in a subsequent time period (n + 1). The relationship between this one time occurrence of order and subsequent sale across time periods (n) and (n + 1) is classified as Executes (C E). The implied definition is that Executes (C E) is a Participation (rpo) in which a commitment (C firstness/independent item) is related to a subsequent event (E firstness/independent item). Similar examples are given for the REAC relationships of [Involvement (C A) order vendor], [Reserved (C R) reservation room], and [Reciprocal (C C) requisition job order]. In each of the four Commitment relationships (C E), (C A), (C R), and (C C), the occurrent (o) nature and timing of the Participation (rpo) is left unspecified, but is necessary for use by future researchers and developers. There are several major differences in the manner in which the G/M paper presents the secondness categories of Description (rac) and History (rao). One notable difference is that these REAC relationships are presented in Fig. 4 in denotative form only (A AT), etc., without any connotative wording associated to each. A second difference is that the relationships are summarized without individual reference in the text of the G/M paper. Still another difference is that History (rao) and Description (rac) are the only 2 of the 12 ontological categories also represented by supporting Figs. 5 and 6. 2 Use in a dictionary connotative sense. 30 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 Still more important differences exist than the presentation style. The Sowa (1999) materials often use the terms: (1) typify, (2) characterize, and (3) scenario as English connotative words, but does not use them in a technical ontological reserved word denotative sense. The G/M paper introduces subcategory titles of: 1. Typification to subcategorize physical History (rao) relationships and Description (rac) relationships. 2. Characterization to subcategorize abstract History (rao) relationships. 3. Scenario to subcategorize abstract Description (rac) relationships. The creation of new terms for subgrouping relationships in the secondness categories is not a problem directly, but Typification has a strong chance of misleading researchers (see discussion of Fig. 6 in the following section on erroneous analyses) because the same term is used for subgroupings within both continuant Descriptions (rac) and occurrent Histories (rao) categories. Characterization and Scenario are words used by Sowa and other philosophers to help describe ontological concepts, but have not been previously used as an ontological reserved word for subgroupings. Because the Typification, Characterization, and Scenario subgroupings are not necessary for ontological analysis of the REAC model and because Typification is potentially misleading in its dual-purpose usage, none of these three terms will be discussed further or redefined in this response. It is recommended that the terms not be considered as ontological reserved words. 4.2. Thirdness (mediating) categories In G/M Fig. 4, the four ontological thirdness (mediating) categories are presented with 15 total REAC relationships shown beneath the form category titles. All 15 of the listed relationships are presented as connotative words only without specific component denotation. Two of these reserved words are conflicting repeats. Configuration is illustrated as relationship under both Structure (mpc) and Reason (mac) categories. Policy is used to connote both Reason (mac) and Purpose (mao) categories. It should be apparent that the same word cannot be used for denoting relationships in two different categories nor connotatively without causing great confusion for readers. The general approach that should be used for defining REAC relationships in the Structure (mpc) category is that Junctures (rpc) are combined with other Junctures (rpc) or continuant Objects (ipc) for a specified Reason (mac). Unfortunately, the G/M paper does not present their thirdness level relationships in this format. The result is a loss of clarity and precision. Responsibility is illustrated in G/M Fig. 4 as the first of three thirdness Structure (mpc) relationships. An initial concern is that G/M are now introducing an REAC thirdness relationship term (Responsibility) that has clearly different denotation and connotative meanings, but appears as the exact same term that has been associated with the REA model for over 20 years. It is believed that readers will be confused as to which meaning applies. A major problem that is also applicable to other thirdness terms introduced for REAC thirdness level relationships is that no triadic denotations of the relationships are specified. J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 31 The text of the G/M paper emphasizes a parallel association with the technical usage of the same term in Responsibility Accounting. As a result, the G/M paper does not provide sufficient information to provide a precise ontological definition of Responsibility, but also confuses the terminology with conflicting definitions in the original REA model and in Responsibility Accounting. Partnering is presented as an explanation of some of the reasons two parties external to a firm might form an association. This definition is in conflict with the manner in which partnering is commonly used in the extant value chain literature and in contradiction to the Sowa definition of a Structure (mpc) relationship. Configuration is used to first identify a Structure (mpc) relationship, but then again for a Reason (mac) category relationship. The term configuration is further used to parallel the engineering rationale. . . to explain at least some of the reasoning behind the insertion of a certain resource. . . The apparent problem is that the three terms rationale, reasoning, and resource all imply specific ontological denotations that are in conflict with the connotative usage in this sentence. The three remaining thirdness (mediating) level ontological categories are Situation (mpo), Reason (mac), and Purpose (mao). The terminology used to connote REAC relationships in each of these three categories generates the same type of confusion and conflict as discussed above for the Structure (mpc) category. In summary: None of the relationships are presented with a precise denotative definition. Two terms (configuration and policy) are used with two different categories. Two terms (responsibility and configuration) are in conflict with other extant literature. The term cells is used as synonymous with ontological categories. The terms rationale, reason, and purpose are used somewhat interchangeably for discussion but in conflict with the ontological reserved denotation. Of greater importance than the potential confusion generated by the terminology problems is the overview completeness. Although erroneous with respect to the History (rao) category, all of the eight ontological categories for firstness and secondness levels contain complete denotation of all possible combinations of REAC model components with respect to each category. There is no attempt to denote the model components of the thirdness level relationships and no attempt to explain or provide logic as to why the 15 relationships presented are complete or comprehensive groupings of thirdness relationship primitives. (This problem is further discussed in the subsequent section on the completeness problem). In final discussion of the terminology introduced for the 12 (2 2 3 factorial) ontological categories, it is reemphasized that the true definitions are based on combinations of the three denoted facets [(physical vs. abstract), (continuant vs. occurrent), and (firstness vs. secondness vs. thirdness)] rather than English connotations of the words used for category titles. Each category is defined by a combination of one item from each of the three facets i.e., Object (ipc). It should be further noted that Sowa has changed some of the words used as category titles over the time period of his writings (1984 vs. 1999). It is here proposed that further changes be made in 3 of the 12 category titles when used for an interenterprise data 32 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 structure microworld in order to mitigate semantic confusion for future researchers and developers wishing to apply ontological analysis to the REAC model. Schema is a word that is used often by IT professionals, AIS researchers, database designers, computer scientists, and others with a specific technical meaning. For future research and development of interenterprise information architecture, the word schema will continue to be often used in the IT technical context. It is likely that introduction of Schema (iac) in a technical ontology denotation context with an entirely different meaning would cause substantial confusion. It is recommended that the Sowa ontology category title Schema (iac) be changed to Formulation (iac) for future REAC development purposes. Similarly, the word participation has been previously defined and used for technical purposes in the REA model (McCarthy, 1979, 1982). For this reason, it is recommended that the Sowa ontology category title Participation (rpo) be changed to Mutualization (rpo) for REAC development purposes. The word history has not been used with special technical meaning in extant AIS literature, but connotes factual events occurring in the past to most persons reading the English word. In future ontological analyses of the extended REAC model, relationships in the History (rao) category will most often be used in connection with Commitments (C) and future anticipated Events (E) with the result that understanding may well be hindered by the contradictory English connotation. It is recommended that the Sowa ontology category title of History (rac) be changed to Compendium (rac) for REAC research and development purposes. 4.3. Erroneous analyses Characterization is described on page 9 as a subgrouping for three Juncture categories (AT AT), (AT RT), and (RT RT). It has been previously recommended to delete characterization as reserved word. If retained, it is a subgrouping within the description category rather than three different Junctures. Relationships between (AT AT), (AT RT), and (RT RT) are REAC model relationships within the Description (rac) category. Seven REAC model relationships are listed under the Scenario subgrouping within the History (rac) category. Four of the seven listed relationships [(ET RT), (ET AT), (CT AT), and (CT RT)] are unlawful state space relationships that combine occurrent Script (iao) images with continuant Schema (iac) images. The Sowa (1999) definition of History (rac) is a proposition that relates a Script (iao) to another occurrent (o) as a characterization of the occurrent (o). As such, the independent Schema (iac) relationships (AT) and (RT) are not to be meaningfully combined with Script (iao) relationships. The same problem with Fig. 4 relationships in the History (rac) category is present in the Fig. 6 schematic. In the reviewer s opinion, the problem in Fig. 6 is encountered because the subgrouping term Typification is used for both the continuant Description (rac) and occurrent History (rao) categories and the denotation of continuant (c) vs. occurrent (o) is not included. In the top portion of G/M Fig. 6 Food Type (RT a continuant) is related to Preparation Type (ET an occurrent) in the Scenario subgrouping of relationships. Preparation Type is J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 33 represented to be the same as a recipe for food preparation. If Preparation Type is an occurrent (o) type of an Event (E), then the preparation is dynamic and different in each occurrence i.e., a master chef uniquely prepares a dish for a given customer using a specific cut of meat or fish. When the customer or cut of meat changes, the master chef also changes preparation rather than following a cookbook recipe that is static (a continuant) that remains the same for every preparation. When food type is considered a general description continuant, it is meaningful to combine it in relationship with a continuant resource (such as a cookbook recipe) that is also a continuant remaining static over the time period used for preparing food. If the preparation type is an occurrent that changes dynamically with each unique preparation, then the meaningful relationship is to combine it with another occurrent. 5. Incomplete application Beyond terminology and erroneous analysis, the biggest hindrance to future interenterprise system research and development based on ontological analysis of the extended REAC model is incompleteness. The benefit of Sowa s ontology is that everything that exists can be classified into a framework of 12 categories. The benefit of the REAC model means that a theoretically sound taxonomy exists for all entities in an interenterprise value chain to analyze all the microworld information needs within a consistent framework of relationships and interactions between four major components and the four type images of those components. An application of Sowa s ontological 12-category classification scheme to the REAC model is that all possible relationships and interactions between and among the eight model components can be placed within 12 categories. With theoretically sound and agreed-upon classifications of all information needs within the interenterprise microworld, the sharing of information within and between associated enterprises is greatly enhanced. A critical problem with the G/M paper is that it does not provide a complete analysis of the eight REAC model components within the 12 Sowa categories. The REAC model relationships in the thirdness level of ontological categories fails to include specific denotation of REAC component combinations as well as logic to explain the completeness or comprehensiveness of the relationships with respect to the total information architecture for the interenterprise microworld. The crux of applying ontological analysis to the expanded REAC components is that all possible lawful state space relationships are clearly and precisely placed into 12 categories that would be consistently observed by researchers and developers of interenterprise data classifications. This requires that the many different potential thirdness level Reasons (mac) and Purposes (mao) for interenterprise operations and events are condensed into relatively few subgroupings agreed upon by stakeholders in the value chain and combined respectively with all the noted secondness level Junctures (rpc) and Participations (rpo), resulting in precisely denoted relationships that can be used by researchers and developers to consistently classify all activities impacting the interenterprise database. An ontological analysis that 34 J.C. Lampe / International Journal of Accounting Information Systems 3 (2002) 17 34 proposes a precisely defined set of comprehensive REAC components is suggested for a forthcoming issue of the International Journal of AIS. References Bagranoff NA, Houghton KA. The REA and traditional accounting models: a study of cognitive structures and measured meaning. Working paper, 1999. Bunge M. Treatise on basic philosophy: Ontology I. The furniture of the world, vol. 3. Boston: Reidel, 1977. Bunge M. Treatise on basic philosophy: Ontology II. The furniture of the world, vol. 3. Boston: Reidel, 1979. Geerts GL, McCarthy WE. Augmented intensional reasoning in knowledge-based accounting systems. J Inf Syst 2000a;14(2):127 50 (Fall). Geerts GL, McCarthy WE. The ontological foundation of REA enterprise information systems. Paper presented to the American Accounting Association Conference, Philadelphia, 2000b (August). McCarthy WE. An entity-relationship view of accounting models. Account Rev 1979;54:667 86 (October). McCarthy WE. The REA accounting model: a generalized framework for accounting systems in a shared data environment. Account Rev 1982;57:554 78 (July). Sowa J. Knowledge Representation: Logical, Philosophical, and Computational Foundations. Pacific Grove, CA: Brooks / Cole, 1999. Wand Y, Weber R. An ontological model of an information system. IEEE Trans Software Eng 1990;16(11): 1282 92 (November). Weber R. Ontological foundations of information systems Queensland, Australia: Coopers & Lybrand, 1997.

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