Critical success factors for budgeting systems in the German context: an empirical analysis

In recent years, the contribution of budgeting to corporate success is being questioned. In spite of this criticism, scholars have hardly presented any context-specific and integrated recommendations about how to design budgeting systems. Instead, most suggestions are mere descriptions of individual aspects which are often based on anecdotal evidence only. This paper provides empirical findings on how companies in Germany organise their budgeting systems and which success factors contribute to an effective and efficient budgeting system. The paper is based on a case study approach. First, four budgeting types are compiled based on an extensive literature review. Second, 12 case studies are used to analyse the configuration of budgeting systems in Germany in order to detect context-specific strengths and weaknesses and to provide recommendations for improvement. The results confirm the four different budgeting types. Their specific configuration is contingent upon company size and rivalry of the industry. The findings provide insights into how to adjust a company's budgeting system to context-specific requirements. Furthermore, it supports managers in the analysis of their budgeting systems and reveals areas for improvement.