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Determinants and effects of the diagnostic and interactive use of control systems: an empirical analysis on the use of budgets

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  • Stefan Hofmann
  • Andreas Wald
  • Ronald Gleich

Abstract

Based on Simon’s distinction between diagnostic and interactive control approaches, this study examines the determinants and effects of the use of budgets. Using survey data from German manufacturing firms, the study analyzes a broad set of potential influencing factors. We test a structural equation model which explains a significant part of the variance of the interactive and of the diagnostic use of budgets. The way budgets are used highly matters with respect to controlling business strategy and influencing firm performance. Interactive and diagnostic uses of budgets significantly contribute to the formation of emergent strategies and to the implementation of intended strategies. The study extends contingency research by analyzing different aspects of the external and internal business environment and their influence on the use of budgets. We contribute to the literature in two ways: First, the results on the effects of different influencing factors may be used for theory development, and second, it provides a basis for further empirical investigations which may focus on one particular factor. Copyright Springer-Verlag Berlin Heidelberg 2012

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  • 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.
    • Handle: RePEc:spr:metrik:v:23:y:2012:i:3:p:153-182
    DOI: 10.1007/s00187-012-0156-9
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    Cited by:

    1. Timur Pasch, 2019. "Strategy and innovation: the mediating role of management accountants and management accounting systems’ use," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(2), pages 213-246, July.
    2. Ionela Ursu & Iuliana Georgescu, 2022. "Planning With Or Without Budgets? The €Œnew Controlling†Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 30, pages 105-118, December.
    3. Ranjith Appuhami & Faruk Bhuiyan & Christina Boedker, 2024. "Navigating frugality and creativity urgencies: the role of diagnostic use of budgets and goal clarity," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 35(2), pages 235-264, June.
    4. Xiangfei Zeng & Ning Zhang & Lianghua Chen & Wenpei Zhang, 2023. "The Impact of Interactive Control in Budget Management on Innovation Performance of Enterprises: From the Perspective of Manager Role Stress," IJERPH, MDPI, vol. 20(3), pages 1-21, January.
    5. Ulf Diefenbach & Andreas Wald & Ronald Gleich, 2018. "Between cost and benefit: investigating effects of cost management control systems on cost efficiency and organisational performance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(1), pages 63-89, March.
    6. repec:wsi:acsxxx:v:21:y:2019:i:08:n:s1363919619500117 is not listed on IDEAS
    7. Christian Nitzl & Wynne W. Chin, 2017. "The case of partial least squares (PLS) path modeling in managerial accounting research," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(2), pages 137-156, May.
    8. Bellora-Bienengräber, Lucia & Derfuss, Klaus & Endrikat, Jan, 2023. "Taking stock of research on the levers of control with meta-analytic methods: Stylized facts and boundary conditions," Accounting, Organizations and Society, Elsevier, vol. 106(C).
    9. 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.

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