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A Field Study of the Emerging Practice of Beyond Budgeting in Industrial Companies: An Institutional Perspective

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  • Tiina Henttu-Aho
  • Janne J�rvinen

Abstract

The accounting literature differentiates between key functions of budgeting, such as planning, control, and evaluation, and mostly assumes that firms carry out an annual budgeting exercise. The purpose of this paper is to explore how an institutionalised practice, such as budgeting, changes and to examine the implications of such change for the functions of budgeting. We conduct a field study of five industrial companies that recently either abandoned their annual budgeting system or radically simplified it. Our findings suggest that although new management accounting tools replace the budgeting system, the planning, control, and evaluation functions remain. We observe two approaches for the emerging practice of Beyond Budgeting. In the first approach, firms differentiate between target setting and forecasting. This differentiation appears to be a driver for budget abandonment. In the second approach, target setting and forecasting remain interlinked and many characteristics of traditional annual budgeting remain, albeit in a simplified form.

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  • Tiina Henttu-Aho & Janne J�rvinen, 2013. "A Field Study of the Emerging Practice of Beyond Budgeting in Industrial Companies: An Institutional Perspective," European Accounting Review, Taylor & Francis Journals, vol. 22(4), pages 765-785, December.
    • Handle: RePEc:taf:euract:v:22:y:2013:i:4:p:765-785
    DOI: 10.1080/09638180.2012.758596
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    Cited by:

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    2. Tiina Henttu-Aho, 2018. "The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 327-360, December.
    3. Mareike Bergmann & Christian Brück & Thorsten Knauer & Anja Schwering, 2020. "Digitization of the budgeting process: determinants of the use of business analytics and its effect on satisfaction with the budgeting process," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(1), pages 25-54, April.
    4. Bhimani, Alnoor & Sivabalan, Prabhu & Soonawalla, Kazbi, 2018. "A study of the linkages between rolling budget forms, uncertainty and strategy," The British Accounting Review, Elsevier, vol. 50(3), pages 306-323.
    5. Isoboye Jacob Damieibi (PhD), 2021. "Effect of Internal Audit Practices On Aggregate Fiscal Discipline of Government Organisations in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(6), pages 08-28, June.
    6. Palermo, Tommaso, 2018. "Accounts of the future: a multiple-case study of scenarios in planning and management control processes," LSE Research Online Documents on Economics 86648, London School of Economics and Political Science, LSE Library.

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