Budgeting in Times of Economic Crisis

Becker, Sebastian D.; Mahlendorf, Matthias D.; Schäffer, Utz; Thaten, Mario

doi:10.1111/1911-3846.12222

Cited by 105 publications

(175 citation statements)

References 106 publications

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“…In this study, we concentrate on analyzing the impacts of three contingency variables on the research model parameters: Perceived Environmental Uncertainty (PEU), size, and strategy (e.g. Becker et al 2015). Previously, we have already shortly referred to the budgeting effects of PEU and strategy.…”

Section: Effect Of Contingency Variablesmentioning

confidence: 99%

“…Ezzamel (1990) showed that high PEU is associated with an emphasis on budgets for evaluation and required explanation of variances but also interactions between superiors and subordinates. Recently, Becker et al (2015) found that economic crisis in 2008 increased budgeting role in planning and resource allocation but decreased its role in performance evaluation. The budgets have been criticized that traditional budgets are even unsuitable for firms which have high uncertainty (see Frow et al 2010) because they may become quickly out of date (Libby and Lindsay 2010).…”

Section: Effect Of Contingency Variablesmentioning

confidence: 99%

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Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms

2016

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AcknowledgmentsThe contributions of the companies responding to the survey are gratefully acknowledged. We also appreciate the constructive comments of three reviewers and the editor. Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firmsAbstract Innovation has generally been considered essential to the prosperity of firms. The existing innovation literature does not emphasize budgeting as an important contributor to product innovation, even though it recognizes that poor budgeting may weaken the capability to innovate. However, the budgeting literature suggests that budgets can be used in different ways to improve firm performance. The purpose of this study is to investigate how the frequency of budget preparation and the interactive use of budgets are associated with product innovation and firm performance. The empirical data were collected, through a web-based survey, from CFOs and CEOs in 132 Finnish firms. The results of our partial least squares (PLS) analysis indicate that the frequency of budget preparation positively affects product innovation through interactive budget use, which supports our hypothesis. Furthermore, the frequency of budget preparation and interactive budget use do have a direct positive relationship with firm performance, but one mediated by product innovation. Therefore, this study contributes to the innovation and budgeting literature by showing the frequency of budget preparation and interactive use of budgets to be two separate and important factors in product innovation. The results also show that the relationship between budgets and product innovation and performance are different in defender and prospector firms. Highlights This study shows that the frequency of budget preparation and the interactive use of budgets affect both product innovation and firm performance. Interactive budget use is positively associated with product innovation. The frequency of budget preparation has a positive relationship with product innovation when budgets are used interactively. The frequency of budget preparation and interactive budget use have a positive relationship with firm performance, but one mediated by product innovation. Product innovation has a positive relationship with financial and non-financial performance. Interactive budgeting has a positive relationship with product innovation in defender firms but not in prospector firms. Budget preparation frequency has a negative relationship with non-financial performance in prospector firms. Article classification: Research paper

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Section: Effect Of Contingency Variablesmentioning

confidence: 99%

Section: Effect Of Contingency Variablesmentioning

confidence: 99%

Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms

2016

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“…It is important to notice, that budgeting became more important for planning and resource allocation, but less important for performance evaluation in companies effected more strongly by the 2008 economic crisis (Becker et al, 2016).…”

Section: Identifying Problemsmentioning

confidence: 99%

Insight into budgeting practices: empirical study of the largest manufacturing companies in Lithuania

Klimaitienė¹,

Ramanauskaitė²

2019

Science and Studies of Accounting and Finance: Problems and Perspectives

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Many research studies have identified an increasing number of disadvantages that arise from using traditional budgeting methods that must be addressed in order to achieve better performance management. The aim of this research is to investigate the current budgeting practices of the largest manufacturing in Lithuania and to find out if the budgeting practices of Lithuanian companies lead to the issues that can be observed in literature and foreign studies. The main objective of the research is to identify the prelevant budgeting trends in the largest manufacturing Lithuania companies and to compare these results with the results of the research accomplished in other countries. The design of the study is based on empirical study-questionnaire. A questionnaire for the assessment of the current budgeting practices used by the largest Lithuanian companies was created. A cross-sectional analysis of the results has been performed. The performed questionnaire-based survey indicates certain trends in budgeting practices in Lithuania. The cross-analysis results show that companies with highly rated budget have more sophisticated budgeting methods and, conversely, companies that rated their budget with the average rating, have more traditional budgeting methods. The most important aspects which affect the effectiveness of budget are indicated. The research points out the necessity of adopting more sophisticated budgeting aspects which contribute to greater satisfaction while using budgets for better performance management. This study reveals which budgeting aspects make a significant impact on the satisfaction and the effectiveness of budgets. The interpretations of results allowed to define the main trends of budgeting in companies of Lithuania. The results of previous researches from Czech Republic companies, Luxembourg companies, South African Republic companies, Spain companies, Canada companies, Malaysia companies, Australia companies and a study conducted by Quantrix, which were accomplished by other authors were presented and these results were compared with the results of the research accomplished in Lithuania. Such course of investigation allowed to identify the the following most important aspects that affect budgeting efficiency and satisfaction: strategic goals set in the company; the budgeting period; including employees in the budgeting process; the period of the budget created for the operating activities of the company; flexibility of budgets; the frequency of budget review; using and including key performance indicators. The findings of empirical analysis revealed that Lithuanian companies do not use all listed main aspects that affect budgeting efficiency and satisfaction. So it is important for these companies to include these aspects into budgeting process.

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“…Nevertheless, recent studies of budgeting provide some evidence about the use of scenarios within planning and management control cycles. For example, Becker et al (2016) show that organisations develop scenarios in order to model the outcomes of different but likely future states of their business context and react quickly in case planning assumptions prove untrue in times of economic crisis. Henttu-Aho (2016) shows how, in a Finnish company that tried to alter the static nature of the budgeting process, controllers prepared alternative scenarios of the future state of affairs to support internal discussions.…”

Section: Scenarios In the Management Accounting Literaturementioning

confidence: 99%

“…Recent literature draws attention to the use of scenarios in planning and management control processes (Roche, 2010;Van der Stede and Palermo, 2011;Kaplan and Mikes, 2012;Merchant and Van der Stede, 2012;Becker et al, 2016;Henttu-Aho, 2016;Sponem and Lambert, 2016). Textbooks and professional articles describe scenarios and scenario analysis as the prospective analysis of multiple futures before the measurement of performances occurs (Roche, 2010;Van der Stede and Palermo, 2011;Merchant and Van der Stede, 2012).…”

Section: Introductionmentioning

confidence: 99%

Accounts of the future

Palermo

2018

QRAM

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This paper examines the design and use of scenarios in planning and management control processes. Research approach The study is based on an exploratory case-study approach. Qualitative data has been collected between 2008 and 2011 from three energy companies operating in Italy. Findings The paper sheds light on three styles of designing and using scenarios. In the first (called 'reactive'), scenarios provide a means for corporate actors to analyse past performance in the light of future expected performance. In the second ('proactive'), scenarios contribute to envision different future states of the world. In the third ('disciplined'), scenarios contribute to develop plausible, if not accurate, narratives about future outcomes. Research limitations/implications The study is comparative and exploratory. Possible areas for further work based on in depthstudies of scenarios within planning and control processes are identified. Practical implications The comparative analysis of the case-study material has implications for the ways in which flexible forms of management control can be mobilised by managers as a resource of action. It is shown that choices around the design and use of scenarios can mitigate some concerns with traditional planning and management control processes focused on the achievement of a single set of targets, but also raise new ones. Originality The paper sheds light on a scenario-based approach-called 'disciplined flexibility'-that avoids the restrictive nature of budgetary controls without losing the benefits of setting a plan and a target for the future. The paper outlines elements that may support the use of 'disciplined flexibility', but also its potential limitations.

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Budgeting in Times of Economic Crisis

Cited by 105 publications

References 106 publications

Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms

Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms

Insight into budgeting practices: empirical study of the largest manufacturing companies in Lithuania

Accounts of the future

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