Content area
Full text
Innovations in accounting, performance measurement and management: international trends
Edited by Toomas Haldma, Salme Näsi and Giuseppe Grossi
1 Introduction
In recent years, criticism of budgeting has prevailed among practitioners ([7] Bogsnes, 2009; [8] Bunce et al. , 1995; [18] Gary, 2003; [26], [27], [28] Hope and Fraser, 2003a, b, c; [42] Wallander, 1999) who claim that the dissatisfaction with budgets, among other things, is due to the costs of preparing budgets, the increased budget gaming and the increasing environmental uncertainty that companies are facing. Even though this critique seems to have gained momentum in recent years, it should be noted that also early budgeting research ([3] Argyris, 1953; [15] DeCoster and Fertakis, 1968) discussed dissatisfaction with budgets but primarily focusing on the supervisor's way of using budgets.
The more recent critique against budgets focuses on several topics. The use of budgeting for performance evaluation is criticised for motivating to dysfunctional behaviour in the form of budget gaming ([30] Jensen, 2001) and the traditional budgeting process is criticised for being too costly a process taking up valuable management time ([26] Hope and Fraser, 2003a). The critique also focuses on the changing business environment. Thus, [8] Bunce et al. (1995) argue that the business environment has become highly competitive and volatile and that traditional budgeting is not suitable for these new conditions. Likewise, [26] Hope and Fraser (2003a) argue that traditional budgets have difficulty in coping with today's uncertain and turbulent environment as traditional budgets are suited for more stable conditions. [42] Wallander (1999, p. 419) calls traditional budgeting "[...] an outmoded way of controlling and steering a company".
As pointed out by [22] Hansen et al. (2003), the research on budgeting has to some extent ignored some of these concerns with budgets prevailing among practitioners, and thereby a disconnection between research and practise might have been created although some research based articles have been published concerning the Beyond Budgeting (BB) idea ([16] Ekholm and Wallin, 2000; [22] Hansen et al. , 2003; [37] Neely et al. , 2003; [32] Libby and Lindsey, 2010; [43] Østergren and Stensaker, 2011).
The survey-based part of the existing BB research shows that relatively few companies have abandoned or plan to abandon the traditional annual budget ([16] Ekholm and Wallin,...