IDEAS home Printed from https://ideas.repec.org/a/spr/jmgtco/v31y2020i1d10.1007_s00187-019-00291-y.html
   My bibliography  Save this article

Digitization of the budgeting process: determinants of the use of business analytics and its effect on satisfaction with the budgeting process

Author

Listed:
  • Mareike Bergmann

    (Ruhr University Bochum)

  • Christian Brück

    (Ruhr University Bochum)

  • Thorsten Knauer

    (Ruhr University Bochum)

  • Anja Schwering

    (Ruhr University Bochum)

Abstract

Since the use of business analytics promises automation of business processes and time savings, the budgeting process seems predestined for the integration of analytical methods. Therefore, this study examines the determinants of the use of business analytics in the budgeting process and its effect on satisfaction with the budgeting process. Specifically, we focus on one technical determinant (data infrastructure sophistication) and the importance of the two major budgeting functions (the planning and the evaluation function), which could affect the degree of dissemination of using analytical methods. Based on a survey among German companies, we find, as predicted, that the sophistication of the data infrastructure is positively associated with the use of business analytics in the budgeting process. Further, the more a company emphasizes the planning function, the greater the extent to which business analytics is used in the budgeting process. In contrast, we find no association between the evaluation function and the use of business analytics in the budgeting process. Finally, we find that the use of business analytics is positively associated with satisfaction with the budgeting process. Thus, the use of business analytics can help to overcome dissatisfaction with traditional budgeting systems. Overall, our findings provide practitioners with valuable indications under which circumstances the use of analytical methods appears reasonable.

Suggested Citation

  • Mareike Bergmann & Christian Brück & Thorsten Knauer & Anja Schwering, 2020. "Digitization of the budgeting process: determinants of the use of business analytics and its effect on satisfaction with the budgeting process," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(1), pages 25-54, April.
    • Handle: RePEc:spr:jmgtco:v:31:y:2020:i:1:d:10.1007_s00187-019-00291-y
    DOI: 10.1007/s00187-019-00291-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00187-019-00291-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00187-019-00291-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sebastian Becker, 2014. "When Organizations Deinstitutionalize Control Practices: A Multiple-Case Study of Budget Abandonment," Working Papers hal-02058257, HAL.
    2. Elbashir, Mohamed Z. & Collier, Philip A. & Davern, Michael J., 2008. "Measuring the effects of business intelligence systems: The relationship between business process and organizational performance," International Journal of Accounting Information Systems, Elsevier, vol. 9(3), pages 135-153.
    3. Autor, David H., 2013. "The "task approach" to labor markets : an overview," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(3), pages 185-199.
    4. Curtis P. Armstrong & V. Sambamurthy, 1999. "Information Technology Assimilation in Firms: The Influence of Senior Leadership and IT Infrastructures," Information Systems Research, INFORMS, vol. 10(4), pages 304-327, December.
    5. Tommaso Palermo, 2018. "Accounts of the future," Qualitative Research in Accounting & Management, Emerald Group Publishing Limited, vol. 15(1), pages 2-23, March.
    6. Chapman, Christopher S. & Kihn, Lili-Anne, 2009. "Information system integration, enabling control and performance," Accounting, Organizations and Society, Elsevier, vol. 34(2), pages 151-169, February.
    7. Ajay Agrawal & Joshua Gans & Avi Goldfarb, 2019. "The Economics of Artificial Intelligence: An Agenda," NBER Books, National Bureau of Economic Research, Inc, number agra-1, March.
    8. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    9. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 339-376.
    10. Susan Haka & Ranjani Krishnan, 2005. "Budget Type and Performance — The Moderating Effect of Uncertainty," Australian Accounting Review, CPA Australia, vol. 15(35), pages 3-13, March.
    11. Stephen Hansen, 2011. "A Theoretical Analysis of the Impact of Adopting Rolling Budgets, Activity-Based Budgeting and Beyond Budgeting," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 289-319.
    12. Katarina Østergren & Inger Stensaker, 2011. "Management Control without Budgets: A Field Study of 'Beyond Budgeting' in Practice," European Accounting Review, Taylor & Francis Journals, vol. 20(1), pages 149-181.
    13. Baysinger, Barry D & Butler, Henry N, 1985. "Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 1(1), pages 101-124, Spring.
    14. Tiina Henttu-Aho, 2018. "The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 327-360, December.
    15. Bo-Goran Ekholm & Jan Wallin, 2000. "Is the annual budget really dead?," European Accounting Review, Taylor & Francis Journals, vol. 9(4), pages 519-539.
    16. Erik Brynjolfsson & Kristina McElheran, 2016. "The Rapid Adoption of Data-Driven Decision-Making," American Economic Review, American Economic Association, vol. 106(5), pages 133-139, May.
    17. Tenenhaus, Michel & Vinzi, Vincenzo Esposito & Chatelin, Yves-Marie & Lauro, Carlo, 2005. "PLS path modeling," Computational Statistics & Data Analysis, Elsevier, vol. 48(1), pages 159-205, January.
    18. Tiina Henttu-Aho & Janne J�rvinen, 2013. "A Field Study of the Emerging Practice of Beyond Budgeting in Industrial Companies: An Institutional Perspective," European Accounting Review, Taylor & Francis Journals, vol. 22(4), pages 765-785, December.
    19. Côrte-Real, Nadine & Oliveira, Tiago & Ruivo, Pedro, 2017. "Assessing business value of Big Data Analytics in European firms," Journal of Business Research, Elsevier, vol. 70(C), pages 379-390.
    20. Wallander, Jan, 1999. "Budgeting -- an unnecessary evil," Scandinavian Journal of Management, Elsevier, vol. 15(4), pages 405-421, December.
    21. Otley, Dt, 1978. "Budget Use And Managerial Performance," Journal of Accounting Research, Wiley Blackwell, vol. 16(1), pages 122-149.
    22. Baines, Annette & Langfield-Smith, Kim, 2003. "Antecedents to management accounting change: a structural equation approach," Accounting, Organizations and Society, Elsevier, vol. 28(7-8), pages 675-698.
    23. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    24. Van der Stede, Wim A., 2000. "The relationship between two consequences of budgetary controls: budgetary slack creation and managerial short-term orientation," Accounting, Organizations and Society, Elsevier, vol. 25(6), pages 609-622, August.
    25. Shields, Michael D. & Deng, F. Johnny & Kato, Yutaka, 2000. "The design and effects of control systems: tests of direct- and indirect-effects models," Accounting, Organizations and Society, Elsevier, vol. 25(2), pages 185-202, February.
    26. Arnold, Markus & Artz, Martin, 2019. "The use of a single budget or separate budgets for planning and performance evaluation," Accounting, Organizations and Society, Elsevier, vol. 73(C), pages 50-67.
    27. John Hulland, 1999. "Use of partial least squares (PLS) in strategic management research: a review of four recent studies," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 195-204, February.
    28. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    29. Prabhu Sivabalan & Peter Booth & Teemu Malmi & David A. Brown, 2009. "An exploratory study of operational reasons to budget," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 849-871, December.
    30. Palermo, Tommaso, 2018. "Accounts of the future: a multiple-case study of scenarios in planning and management control processes," LSE Research Online Documents on Economics 86648, London School of Economics and Political Science, LSE Library.
    31. Wynne W. Chin & Barbara L. Marcolin & Peter R. Newsted, 2003. "A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic-Mail Emotion/Adoption Study," Information Systems Research, INFORMS, vol. 14(2), pages 189-217, June.
    32. Appelbaum, Deniz & Kogan, Alexander & Vasarhelyi, Miklos & Yan, Zhaokai, 2017. "Impact of business analytics and enterprise systems on managerial accounting," International Journal of Accounting Information Systems, Elsevier, vol. 25(C), pages 29-44.
    33. Agrawal, Ajay & Gans, Joshua & Goldfarb, Avi (ed.), 2019. "The Economics of Artificial Intelligence," National Bureau of Economic Research Books, University of Chicago Press, number 9780226613338, December.
    34. Sebastian D. Becker, 2014. "When Organisations Deinstitutionalise Control Practices: A Multiple-Case Study of Budget Abandonment," European Accounting Review, Taylor & Francis Journals, vol. 23(4), pages 593-623, December.
    35. Peter Hofer & Christoph Eisl & Albert Mayr, 2015. "Forecasting in Austrian companies," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 16(3), pages 359-382, November.
    36. Michael C. Jensen, 2003. "Paying People to Lie: the Truth about the Budgeting Process," European Financial Management, European Financial Management Association, vol. 9(3), pages 379-406, September.
    37. Sebastian D. Becker, 2014. "When Organisations Deinstitutionalise Control Practices: A Multiple-Case Study of Budget Abandonment," Post-Print hal-01097586, HAL.
    38. Thomas Guenther, 2013. "Conceptualisations of ‘controlling’ in German-speaking countries: analysis and comparison with Anglo-American management control frameworks," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(4), pages 269-290, February.
    39. Sebastian D. Becker & Matthias D. Mahlendorf & Utz Schäffer & Mario Thaten, 2016. "Budgeting in Times of Economic Crisis," Contemporary Accounting Research, John Wiley & Sons, vol. 33(4), pages 1489-1517, December.
    40. Christopher L. Shook & David J. Ketchen & G. Tomas M. Hult & K. Michele Kacmar, 2004. "An assessment of the use of structural equation modeling in strategic management research," Strategic Management Journal, Wiley Blackwell, vol. 25(4), pages 397-404, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ágnes Szukits, 2022. "The illusion of data-driven decision making – The mediating effect of digital orientation and controllers’ added value in explaining organizational implications of advanced analytics," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(3), pages 403-446, September.
    2. Kunnathuvalappil Hariharan, Naveen, 2019. "Elements and success factors for an efficient budgeting," MPRA Paper 109507, University Library of Munich, Germany.
    3. Faisal Salman & Seyyed Abbas Hashemi & Daruosh Foroghi, 2023. "Feasibility of Establishing Operational Budgeting in Iraqi Public Universities," Risks, MDPI, vol. 11(2), pages 1-21, February.
    4. Adriana Tiron-Tudor & Delia Deliu, 2021. "Big Data’s Disruptive Effect on Job Profiles: Management Accountants’ Case Study," JRFM, MDPI, vol. 14(8), pages 1-26, August.
    5. Maël Schnegg & Klaus Möller, 2022. "Strategies for data analytics projects in business performance forecasting: a field study," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(2), pages 241-271, June.
    6. Jochen Fähndrich, 2023. "A literature review on the impact of digitalisation on management control," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 34(1), pages 9-65, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tiina Henttu-Aho, 2018. "The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 327-360, December.
    2. Bhimani, Alnoor & Sivabalan, Prabhu & Soonawalla, Kazbi, 2018. "A study of the linkages between rolling budget forms, uncertainty and strategy," The British Accounting Review, Elsevier, vol. 50(3), pages 306-323.
    3. Staci A. Kenno & Michelle C. Lau & Barbara J. Sainty, 2018. "In Search of a Theory of Budgeting: A Literature Review," Accounting Perspectives, John Wiley & Sons, vol. 17(4), pages 507-553, December.
    4. Prabhu Sivabalan & Peter Booth & Teemu Malmi & David A. Brown, 2009. "An exploratory study of operational reasons to budget," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 849-871, December.
    5. Rodney Coyte & Martin Messner & Shan Zhou, 2022. "The revival of zero‐based budgeting: drivers and consequences of firm‐level adoptions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 3147-3188, September.
    6. Sebastian Goebel & Barbara Weißenberger, 2016. "The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(1), pages 69-101, April.
    7. Arnold, Markus & Artz, Martin, 2019. "The use of a single budget or separate budgets for planning and performance evaluation," Accounting, Organizations and Society, Elsevier, vol. 73(C), pages 50-67.
    8. Maarten Goos & Melanie Arntz & Ulrich Zierahn & Terry Gregory & Stephanie Carretero Gomez & Ignacio Gonzalez Vazquez & Koen Jonkers, 2019. "The Impact of Technological Innovation on the Future of Work," JRC Working Papers on Labour, Education and Technology 2019-03, Joint Research Centre.
    9. Sebastian D. Becker & Martin Messner & Utz Schäffer, 2020. "The Interplay of Core and Peripheral Actors in the Trajectory of an Accounting Innovation: Insights from beyond Budgeting," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2224-2256, December.
    10. Stefan Schweikl & Robert Obermaier, 2020. "Lessons from three decades of IT productivity research: towards a better understanding of IT-induced productivity effects," Management Review Quarterly, Springer, vol. 70(4), pages 461-507, November.
    11. Mohamed Z. Elbashir & Steve G. Sutton & Habib Mahama & Vicky Arnold, 2021. "Unravelling the integrated information systems and management control paradox: enhancing dynamic capability through business intelligence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1775-1814, April.
    12. Sebastian Goebel & Barbara E. Weißenberger, 2017. "Effects of management control mechanisms: towards a more comprehensive analysis," Journal of Business Economics, Springer, vol. 87(2), pages 185-219, February.
    13. Tiina Henttu-Aho & Janne J�rvinen, 2013. "A Field Study of the Emerging Practice of Beyond Budgeting in Industrial Companies: An Institutional Perspective," European Accounting Review, Taylor & Francis Journals, vol. 22(4), pages 765-785, December.
    14. Peters, Matt D. & Wieder, Bernhard & Sutton, Steve G. & Wakefield, James, 2016. "Business intelligence systems use in performance measurement capabilities: Implications for enhanced competitive advantage," International Journal of Accounting Information Systems, Elsevier, vol. 21(C), pages 1-17.
    15. Rikhardsson, Pall & Yigitbasioglu, Ogan, 2018. "Business intelligence & analytics in management accounting research: Status and future focus," International Journal of Accounting Information Systems, Elsevier, vol. 29(C), pages 37-58.
    16. Kristina McElheran & J. Frank Li & Erik Brynjolfsson & Zachary Kroff & Emin Dinlersoz & Lucia Foster & Nikolas Zolas, 2024. "AI adoption in America: Who, what, and where," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(2), pages 375-415, March.
    17. Habib Mahama & Zhichao (Alex) Wang, 2023. "Impact of the interactive and diagnostic uses of performance measurement systems on procedural fairness perception, cooperation and performance in supply alliances," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3253-3296, September.
    18. Aydiner, Arafat Salih & Tatoglu, Ekrem & Bayraktar, Erkan & Zaim, Selim & Delen, Dursun, 2019. "Business analytics and firm performance: The mediating role of business process performance," Journal of Business Research, Elsevier, vol. 96(C), pages 228-237.
    19. Sebastian Goebel & Barbara E. Weißenberger, 2017. "The Relationship Between Informal Controls, Ethical Work Climates, and Organizational Performance," Journal of Business Ethics, Springer, vol. 141(3), pages 505-528, March.
    20. Rodgers, Waymond & Guiral, Andrés, 2011. "Potential model misspecification bias: Formative indicators enhancing theory for accounting researchers," The International Journal of Accounting, Elsevier, vol. 46(1), pages 25-50, March.

    More about this item

    Keywords

    Analytics; Budgeting; Business intelligence; Digitization; Forecasts; Planning;
    All these keywords.

    JEL classification:

    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jmgtco:v:31:y:2020:i:1:d:10.1007_s00187-019-00291-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.