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Traditional Budgeting Versus Beyond Budgeting: A Literature Review



    (Babes-Bolyai University, Faculty of Economics and Business Administration,)


    (Babes-Bolyai University, Faculty of Economics and Business Administration,)


    (Babes-Bolyai University, Faculty of Economics and Business Administration,)


Budgets are an important part of the business environment since 1920 and are considered to be the key drivers and evaluators of managerial performance; and the key elements for planning and control. Budgets are the most powerful tool for management control; they can play an essential role in the organization's power politics because it can increase the power and authority of top management and limit the autonomy of lower-level managers. Besides its advantages traditional budgeting presents disadvantages also. In recent years criticism towards traditional budgeting has increased. The basis of this criticism is that traditional budgeting is a relic of the past; it prevents reactions to changes in the market, it cannot keep up with the changes and requirements of today's business world and it isn't useful for business management. In order to eliminate criticism researchers and practitioners have developed more systematic and alternative concepts of budgeting that suits better for the needs of the modern business environment. Beyond budgeting, better budgeting, rolling forecasts, activity-based budgeting are the main alternatives developed in the last years. From the mentioned alternatives this article examines only beyond budgeting. Our paper discusses how budgeting has evolved into its current state, before examining why this universal technique has come under such heavy criticism of late. The paper is a literature analysis, it contributes to the existing managerial accounting literature and it is structured as follows. In the first part the background and evolution of budgeting is presented, followed by the analysis of related theories in traditional budgeting, emphasizing both the advantages and disadvantages of traditional budgeting. The second part of the paper continues with the discussion about alternative budgeting methods highlighting pros and cons of alternative methods, especially beyond budgeting. In the third part conducted surveys and studies are analyzed in order to establish whether traditional or alternative budgeting methods are better and have a positive impact on businesses; or which has more practical usefulness. The final part provides conclusions and discussions for future research.

Suggested Citation

  • Cardos Ildiko Reka & Pete Stefan & Cardos Vasile Daniel, 2014. "Traditional Budgeting Versus Beyond Budgeting: A Literature Review," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 573-581, July.
  • Handle: RePEc:ora:journl:v:1:y:2014:i:1:p:573-581

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    References listed on IDEAS

    1. 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.
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    Cited by:

    1. Dusica Stevcevska-Srbinoska, 2018. "The Advantages of Budgets: A Survey of Macedonian Legal Entities," Business and Economic Research, Macrothink Institute, vol. 8(2), pages 33-55, June.

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    More about this item


    budgeting; traditional budgeting methods; beyond budgeting;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other


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