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Environmental turbulence and the functions of budgetary control

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  • Nicolas Berland

Abstract

While budgetary control is a potentially significant tool when the economic environment is unstable and unpredictable, the analysis of its development demonstrates that its use has dramatically expanded over the time since companies have been able to run forecasts. In order to help them develop budgetary control, companies have implemented strategies that have reduced risks and hence improved their ability to make accurate forecasts. Such strategies have taken many forms and varied from one firm to another. They materialized as various types of agreement, including cartels, through strategies to effect market leadership, or via policies of nationalization. In those companies where the environment was stable and risk limitation was not important, budgetary control could be used for various internal purposes. In this respect, the analysis of the management of companies helps us to identify the purposes for which budgetary control is utilized. It is found that budgetary control allows for greater expansion opportunities and provides the means to strengthen the control of management within major companies. Our observations highlight a contradictory aspect of budgetary control: while it is relevant within an unstable environment, it performs best in an environment which is highly managed.

Suggested Citation

  • Nicolas Berland, 2001. "Environmental turbulence and the functions of budgetary control," Accounting History Review, Taylor & Francis Journals, vol. 11(1), pages 59-77.
    • Handle: RePEc:taf:acbsfi:v:11:y:2001:i:1:p:59-77
    DOI: 10.1080/09585200010015031
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    References listed on IDEAS

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    1. Nicolas Berland, 2000. "Fonctions Du Controle Budgetaire Et Turbulence," Post-Print halshs-00587426, HAL.
    2. Govindarajan, V., 1984. "Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable," Accounting, Organizations and Society, Elsevier, vol. 9(2), pages 125-135, June.
    3. Chapman, Christopher S., 1997. "Reflections on a contingent view of accounting," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 189-205, February.
    4. Hopper, Trevor & Armstrong, Peter, 1991. "Cost accounting, controlling labour and the rise of conglomerates," Accounting, Organizations and Society, Elsevier, vol. 16(5-6), pages 405-438.
    5. Merchant, Kenneth A., 1984. "Influences on departmental budgeting: an empirical examination of a contingency model," Accounting, Organizations and Society, Elsevier, vol. 9(3-4), pages 291-307, October.
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    Cited by:

    1. Nicolas Berland & Trevor Boyns, 2002. "The development of budgetary control in France and Britain from the 1920s to the 1960s: a comparison," European Accounting Review, Taylor & Francis Journals, vol. 11(2), pages 329-356.
    2. Malcolm Anderson, 2002. "Accounting History publications 2001," Accounting History Review, Taylor & Francis Journals, vol. 12(3), pages 505-512.

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