Between Control and Autonomy
Edited by Katarina Kaarbøe, Paul N. Gooderham and Hanne Nørreklit
Chapter 9: The planning-regime concept and its application to three examples of organizational budgeting
In modern organizations, activities are commonly planned and organized through annual budgets. Therefore annual budgets have been thoroughly studied. The ongoing debate about the behavioral aspects of budgeting originated in the 1950s (Argyris, 1952), and gathered speed in the 1970s and 1980s (Covalevski et al., 2007). Some researchers argue that budgets are useful for organizations (Ekholm and Wallin, 2000; Libby and Lindsay, 2010), while others argue that budgets result in dysfunctional behavior (Wallander, 1999; Hope and Fraser, 2003; Neely et al., 2003). One core task of a budget is to coordinate activities among departments. Some argue that this task serves to highlight important areas in which issues need to be discussed and decisions need to be made, while more critical voices argue that such discussions become a game in which different groups act in their own self-interests. Thus, “annual budgeting” can mean different things in different contexts, leading to different planning and coordinating arrangements with a variety of behavioral consequences. In order to improve planning in organizations, we must move away from the dichotomy of budgets as good or bad towards a discussion of when and how budgets can assist in planning, and towards an understanding of how such planning works given different types of budgets. In this chapter, we argue that use of the budget as a planning and coordinating device can be misleading.
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