Management Control without Budgets: A Field Study of 'Beyond Budgeting' in Practice
Budgets have long been the dominant instrument for management control. In recent years however, alternative approaches to management control such as the Balanced Scorecard have been launched. It has even been suggested that organizations should drop the budget and move 'Beyond Budgeting' (Hope and Fraser, Strategic Finance, 82(4), pp. 30-35, 2000). New approaches to management control attempt to respond to the shortcomings of budgets, such as being time consuming and focused on cost reduction rather than value creation. While the Balanced Scorecard and Beyond Budgeting appear to be more closely connected to firm strategy, we know little about how such alternative management control systems function in practice and potential challenges of these new systems. This study is a first step in that direction. We examine 'Beyond Budgeting' in practice by focusing on how corporate level in a large multidivisional oil and energy company adopted this new approach to management control and how it was implemented in two business units. Specifically we investigate: (a) the rules of action that are developed in the absence of budgets; and (b) how the new management control system is expected to influence interaction patterns. Drawing on agency and resource dependency theory in our analysis, our findings indicate that the means of control that are exercised in the absence of budgets alter the relationship between corporate management and division management and new lines of dependency are created between divisions.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 20 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/REAR20 |
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/REAR20|
When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:20:y:2011:i:1:p:149-181. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.