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Analysis of the organizational characteristics related to tight budget goals

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  • ROBERT SIMONS

Abstract

. This study extends our knowledge of the role of budgets in complex organizations. Using survey methods with a sample of Canadian firms, the analysis examines the relationship between tight budget goals and firm performance. Additionally, the effects of business strategy and internal structural characteristics are considered. Statistical tests suggest that tight budget goals are positively related to firm performance, and that business strategy and internal organizational conditions are associated with tightness in budget goals. Résumé. L'auteur ajoute à notre connaissance du rôle des budgets dans les organisations complexes. À l'aide de méthodes d'analyse appliquées à un échantillon d'entreprises canadiennes, il étudie la relation entre les objectifs budgétaires rigoureux et la performance de l'entreprise. Il se penche en outre sur les conséquences de la stratégie commerciale et des caractéristiques structurales internes de l'entreprise. Les tests statistiques donnent à penser que les objectifs budgétaires rigoureux affichent une relation positive avec la performance de l'entreprise, et que la stratégie commerciale et la structure organisationnelle interne sont liées à la rigueur des objectifs budgétaires.

Suggested Citation

  • Robert Simons, 1988. "Analysis of the organizational characteristics related to tight budget goals," Contemporary Accounting Research, John Wiley & Sons, vol. 5(1), pages 267-283, September.
    • Handle: RePEc:wly:coacre:v:5:y:1988:i:1:p:267-283
    DOI: 10.1111/j.1911-3846.1988.tb00705.x
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    2. 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.
    3. Chow, Chee W. & Shields, Michael D. & Wu, Anne, 1999. "The importance of national culture in the design of and preference for management controls for multi-national operations," Accounting, Organizations and Society, Elsevier, vol. 24(5-6), pages 441-461, July.
    4. Bedford, David S. & Speklé, Roland F. & Widener, Sally K., 2022. "Budgeting and employee stress in times of crisis: Evidence from the Covid-19 pandemic," Accounting, Organizations and Society, Elsevier, vol. 101(C).
    5. Luft, Joan & Shields, Michael D., 2003. "Mapping management accounting: graphics and guidelines for theory-consistent empirical research," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 169-249.
    6. Stefan Hofmann & Andreas Wald & Ronald Gleich, 2012. "Determinants and effects of the diagnostic and interactive use of control systems: an empirical analysis on the use of budgets," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(3), pages 153-182, December.
    7. Howard M. Armitage & Dorian Lane & Alan Webb, 2020. "Budget Development and Use in Small‐ and Medium‐Sized Enterprises: A Field Investigation," Accounting Perspectives, John Wiley & Sons, vol. 19(3), pages 205-240, September.
    8. Arnold, Markus C. & Artz, Martin, 2015. "Target difficulty, target flexibility, and firm performance: Evidence from business units’ targets," Accounting, Organizations and Society, Elsevier, vol. 40(C), pages 61-77.
    9. Backhaus, J.G. & Hansen, R., 2000. "Resale price maintenance for books in Germany and the European Union: a legal and economic analysis," Research Memorandum 021, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    10. Christian Daumoser & Bernhard Hirsch & Matthias Sohn, 2018. "Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(2), pages 115-159, August.
    11. Anca Antoaneta Varzaru, 2012. "An Operational Model To Analyze The Evolution Of Wage Bill For Smes In Romania," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(40), pages 129-136.
    12. 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.
    13. Moers, F., 2000. "Financial and non-financial performance measures and managerial short-term orientation: the interactive effect of performance targets," Research Memorandum 053, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    14. Erhart, Raphaela & Mahlendorf, Matthias D. & Reimer, Marko & Schäffer, Utz, 2017. "Theorizing and testing bidirectional effects: The relationship between strategy formation and involvement of controllers," Accounting, Organizations and Society, Elsevier, vol. 61(C), pages 36-52.

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