Managing in Dynamic Business Environments

Managing in Dynamic Business Environments

Between Control and Autonomy

Edited by Katarina Kaarbøe, Paul N. Gooderham and Hanne Nørreklit

This timely and innovative book focuses on budgeting control and ongoing Beyond Budgeting trends and its consequences for the organization. Ensuring an optimal balance between individual autonomy and management control is a critical challenge for organizations operating in dynamic business environments. Too much of the former leads to chaos, and too much of the latter guarantees rigidity. This book explores the tensions that arise in seeking the best possible balance between these two dimensions. Resolving these tensions is a critical challenge for achieving competitiveness.

Chapter 6: Putting Beyond Budgeting ideas into practice

Katarina Kaarbøe, Inger Stensaker and Teemu Malmi

Subjects: business and management, corporate governance, strategic management


This chapter examines how management control practices aiming to move firms “Beyond Budgeting” are interpreted and implemented, and how they subsequently affect practice. Practitioners of Beyond Budgeting have criticized budgeting for some time (Wallander, 1999; Hope and Fraser, 2003a), claiming that the widespread dissatisfaction with budgeting results from the cost of preparing budgets, the gaming associated with the budgeting process and the increased environmental uncertainty that companies face. As a result, numerous companies have replaced annual budgets with alternative forms of management control. These approaches range from technical substitutes, such as rolling forecasts and benchmarking, to more comprehensive solutions, including team structures, empowerment, new policies and more philanthropic human resource practices, which some call Beyond Budgeting (BB) (Becker, 2011; Østergren and Stensaker, 2011). Indeed, the literature presents conflicting evidence on the benefits of budgeting practices and the extent to which companies are abandoning those practices. While the evidence shows that firms are increasingly implementing BB, one stream of research suggests that relatively few companies have actually abandoned budgets altogether or plan to do so (Ekholm and Wallin, 2000), and that budgets continue to be used for motivation and for performance evaluations (Libby and Lindsay, 2010).

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