Understanding why Beyond Budgeting has not been widely adopted

Hudson, Phil (2012) Understanding why Beyond Budgeting has not been widely adopted. (DBA thesis), Kingston University, .


This research aims to understand why Beyond Budgeting, a management accounting innovation, has not been widely adopted. The traditional budgeting process has been the dominant control mechanism for managing businesses for over 100 years. It has been much criticised over the years and the shortcomings have been extensively documented. There have been attempts to develop and improve the budgeting process or elements of it, with Beyond Budgeting being the most recent heavyweight solution put forward. Beyond Budgeting was announced as a CAM-I project in 1997 and presented at the end of the project as a general management model by Hope & Fraser in 2003. The proponents of Beyond Budgeting report significant benefits from implementing it but despite the criticisms of the traditional budget the adoption level of Beyond Budgeting has been low. During the literature review, theories relevant to the adoption of new management accounting innovations were identified and research questions were derived. The multiphase empirical research took a two phase approach. In the first phase, management accountants worldwide, accessed through the Chartered Institute of Management Accountants (CIMA), were surveyed using a web-based questionnaire which culminated in 185 replies. In the second phase, following the analysis of the questionnaires, semi structured interviews were conducted with 50 respondents who had signalled their willingness to participate. The interviews gave further depth to the research expanding into areas not covered by the survey. From the empirical research it was concluded that although adoption of the concept of Beyond Budgeting as a whole has been low, the constituent parts of Beyond Budgeting are being adopted more widely than previously believed, but often not using the term Beyond Budgeting and also by managers who have not heard of the term. Abandoning the traditional budget, a cornerstone to moving to the concept as a whole, has turned out to be one of the biggest hurdles to its wider dissemination. Regulatory and other stakeholder pressure obliges organisations to compile annual budgets added to which accountants and non-finance managers are comfortable with budgeting and understand it. This has led to certain Beyond Budgeting techniques being introduced while retaining the traditional budget. Practical recommendations to professional bodies for more effective dissemination of innovations in future and a summary of pitfalls hindering the implementation of management accounting innovations make up the contribution to practice. The research contributes to theory by adding to the body of literature on the adoption of Beyond Budgeting, comparing the results with the findings of prior research, underlining the continuing relevance of existing theories by using their explanatory power to underpin the findings, documenting additional insights not found in the literature and by proposing a theoretical framework to document factors preventing the adoption of management accounting innovations.

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