Budgeting is a major area of management accounting and receives a lot of interest from
researchers who mainly concentrate their studies on the design of budget schemes and the
process of setting budgets. Concerning the use in practice, a survey of senior managers in 219
publicly traded firms indicated that “75 percent thought of the budgetary process as a managerial
rather than an accounting function” (Zimmerman, 2009, p. 250). However, the effects of budgets
and budget processes on managerial performance and effort are still not clear.
This paper aims at providing an overview of a collection of recent research papers to investigate
how different types of budgets influence managerial behavior and performance and what
implications these findings have for managerial practice. Therefore, in the first section the general
role of budgeting in organizations will be described. Next, different types of budgets and budget
levels are introduced and their effects on managerial behavior and performance will be examined.
Finally, several implications of those effects for managerial practice will be given, before a
conclusion wraps up the main points of this report.
Table of Contents
- 1. Introduction
- 2. The Role of Budgeting in Organizations
- 3. The Effects of Different Types of Budgets and Budget Levels on Managerial Behavior and Performance
- 3.1 Participatory Budgeting
- 3.1.1 Individual Level
- 3.1.2 Group Level
- 3.2 Activity-Based Budgeting and Beyond Budgeting Approaches
- 3.2.1 Activity-based budgeting
- 3.2.2 Beyond Budgeting
- 3.1 Participatory Budgeting
- 4. Implications for Further Research and Managerial Practice
- 4.1 Type of Budget
- 4.2 Design of Internal Reporting System
- 4.3 Managerial Control System and Organizational Design
- 5. Conclusion
Objectives and Key Themes
This paper aims to investigate how different budgeting types influence managerial behavior and performance, and the implications for managerial practice. It reviews recent research to understand the relationship between budgeting and managerial outcomes.
- The role of budgeting in organizational planning and control.
- The effects of participatory budgeting on individual and group levels.
- The impact of activity-based budgeting and beyond budgeting approaches.
- The trade-off between using budgets for planning and performance measurement.
- Implications for the design of internal reporting systems and managerial control.
Chapter Summaries
1. Introduction: This introductory chapter establishes the paper's objective: to explore the influence of various budgeting methods on managerial actions and results. It highlights the existing ambiguity surrounding the impact of budgets on managerial performance, citing a survey showing a significant portion of senior managers view budgeting as a managerial rather than purely accounting function. The chapter sets the stage for a review of current research on the effects of different budget types.
2. The Role of Budgeting in Organizations: This chapter delves into the multifaceted roles of budgeting within organizations, primarily focusing on planning and control. It examines budgeting's function in forecasting profitability, resource allocation, and knowledge dissemination within the organization. The chapter introduces the concept of participative budgeting, highlighting its advantages in leveraging subordinates' superior knowledge of their operational areas. However, it also acknowledges potential drawbacks, such as the risk of dishonest or biased forecasts from subordinates due to information asymmetry and the inherent incentive to overstate productivity when budgets are used for resource allocation. The chapter concludes by noting the tension between using budgets for planning and performance measurement, where the desire for accurate planning information clashes with the incentives for subordinates to report more conservative figures to improve their chances of reward.
3. The Effects of Different Types of Budgets and Budget Levels on Managerial Behavior and Performance: This chapter analyzes the effects of different budgeting methods on managerial behavior and performance, focusing on participatory budgeting at both the individual and group levels and exploring activity-based budgeting and beyond budgeting approaches. It discusses the findings of research into the relationship between budgeting, managerial behavior, and performance, emphasizing the tension between using budgets for planning and for performance evaluation.
Keywords
Budgeting, managerial accounting, participatory budgeting, activity-based budgeting, beyond budgeting, managerial behavior, performance measurement, planning, control, information asymmetry, agency costs, resource allocation.
FAQ: A Comprehensive Language Preview
What is the purpose of this document?
This document provides a comprehensive preview of a research paper investigating the influence of different budgeting methods on managerial behavior and performance. It includes the table of contents, objectives and key themes, chapter summaries, and keywords.
What are the main topics covered in the paper?
The paper explores the role of budgeting in organizational planning and control, focusing on the effects of various budgeting types, such as participatory budgeting, activity-based budgeting, and beyond budgeting approaches. It examines their impact on managerial behavior and performance at both individual and group levels, considering the trade-offs between using budgets for planning versus performance measurement.
What are the key themes of the research?
Key themes include the role of budgeting in organizational planning and control; the effects of participatory budgeting on individual and group levels; the impact of activity-based budgeting and beyond budgeting approaches; the tension between using budgets for planning and performance measurement; and the implications for the design of internal reporting systems and managerial control.
What types of budgeting are discussed?
The paper discusses participatory budgeting (at both individual and group levels), activity-based budgeting, and beyond budgeting approaches. It analyzes the advantages and disadvantages of each method and their implications for managerial behavior and performance.
What is the impact of participatory budgeting?
The paper investigates how participatory budgeting influences managerial behavior and performance. It considers both the potential benefits of leveraging subordinates' knowledge and the potential drawbacks, such as the risk of biased or dishonest forecasts due to information asymmetry.
What is the relationship between budgeting and managerial performance?
The core of the research explores the complex relationship between different budgeting methods and managerial behavior and performance. It examines how the choice of budgeting method affects managerial actions and outcomes, considering the tension between using budgets for planning and for performance evaluation.
What are the implications for managerial practice?
The paper offers implications for managerial practice concerning the type of budget used, the design of internal reporting systems, and the overall managerial control system and organizational design. It highlights the need to consider the trade-offs between planning and performance measurement when choosing a budgeting method.
What are the chapter summaries?
The document provides summaries for each chapter, outlining the main points discussed in each section. Chapter 1 introduces the research objective; Chapter 2 examines the role of budgeting in organizations; Chapter 3 analyzes the effects of different budgeting types; and Chapter 4 discusses implications for further research and managerial practice. Chapter 5 concludes the paper.
What are the keywords associated with this research?
Keywords include budgeting, managerial accounting, participatory budgeting, activity-based budgeting, beyond budgeting, managerial behavior, performance measurement, planning, control, information asymmetry, agency costs, and resource allocation.
Where can I find the full research paper?
This document is a preview. The full research paper is not included here. Contact the publishing company for access to the full paper.
- Citation du texte
- Christoph Butz (Auteur), 2010, Role and Effects of Budgeting in Managerial Practice, Munich, GRIN Verlag, https://www.grin.com/document/176624
