از محدوده آسایش تا محدوده کششی: مطالعه از دو شرکت چند ملیتی با استفاده از ایده های "بودجه بندی"

This paper explores how change in the design principles of management control systems (MCSs) based on implementing the beyond budgeting (BB) ideas has influenced the transition of decision-makers from “comfort” to “stretch” zones and how this transition changed the supply of and demand for managerial information. This paper's starting point is based on the research evidence showing that there are many organizational problems associated with using budgets. Thus, this paper puts forth a previously neglected research context of companies that claim to have abandoned budgeting. In two cases, we illustrate how changes in the design of the MCS can create new management practices based on new ideas of information needed for decision-making. In particular, this paper illustrates how the use of new information provided by the MCS design, which is based on new principles, move decision-makers into the “stretch zone” characterized by new characteristics of decision-makers’ mindset and behavior. We also demonstrate how unbundling target setting, forecasting, and dynamic resource allocation enables better forward-looking and strategy-oriented decisions in situations requiring negotiation and learning.

“Budgeting is [an] unnecessary evil” – this is how Wallander (1999) emphasized the management control problem in modern organizations, and therefore identified the need for rethinking the way management control systems (MCSs) based on budgeting are designed and function. Today, with increasing environmental turbulence and organizational dynamics, many organizations confront a seemingly difficult challenge: how to manage the tension between the need for predictable goal achievement on the one hand, and the pursuit of strategic adaptation and change on the other (Simons, 1995a, Simons, 1995b and Simons, 2005). The traditional budget-coupled MCS is claimed to be incapable of providing the type of information individual decision-makers need to handle increasingly complicated organizational dynamics (e.g., Hope and Fraser, 1997). One solution to this problem is to widen the scope of the MCS (Chenhall and Euske, 2007, Ferreira and Otley, 2009 and Otley et al., 1995) so that the dysfunctional effects of budgeting can be repaired (e.g., Frow et al., 2010). The multiple facets of budgeting and diversity of purposes that the budget serves can also explain why budgets are still being widely used in most organizations (Hansen and Van der Stede, 2004). Nevertheless, budgets are heavily criticized for being too internally oriented, an obstacle to creativity and innovation, and incapable of providing the dynamics necessary to organizations to compete in the new information age (Hope and Fraser, 1997). It is argued that the new management techniques, which have been developed in response to the changing organizational environment, cannot be successfully implemented when management behavior is “snapped back” into its old shape by the invisible power of the budget. Despite the fact that budgeting is probably the most studied phenomenon in business administration research (Covaleski et al., 2003), little has been done to find solutions to this problem in practice (Østergren and Stensaker, 2011). Thus, it is not surprising that many companies have experimented with a radical solution – to replace budgeting with other MCS, or the trend referred to today as beyond budgeting (BB) (Bogsnes, 2009, Hansen et al., 2003 and Hope and Fraser, 1997). Despite the fact that many years have passed since the pioneering introduction of BB in Svenska Handelsbanken in the 70s ( Wallander, 1999), we still know very little about how BB concepts function in practice and especially how replacement of the annual budget with other information tools has improved the abilities of decision-makers in facing increasing environmental uncertainty. However, research on the topic is normative, e.g., explaining the logic behind the BB paradigm ( Hope and Fraser, 2003a and Waal, 2005), or descriptive, with the focus on a search for why BB is not widespread in management practice (e.g., Becker, 2011, Ekholm and Wallin, 2000 and Libby and Lindsay, 2009), or on how organizations are coping with negative aspects/consequences of budgeting (e.g., Frow et al., 2010), or even on defending the use of budgets in particular circumstances (e.g., Greenberg and Greendberg, 2006). However, little attention has been given to in-depth studies of organizations that claim to have implemented BB practices and for which BB is a reality. Even though there are some publications about experiences and models for how BB is implemented in some organizations (see e.g., Wallander, 1999 and Bogsnes, 2009), there is little research done regarding how introduction of BB has changed the way information is produced and used by managers in the organization in new and maybe different ways. This especially concerns the companies that perceived budgeting to be such a problematic practice that they made a formal decision to abandon an annual budget and replace it with a new MCS. There is relatively little known about how these organizations are managed, e.g., in terms of how the flexibility of resource allocation is provided, what performance criteria are used in evaluations, how potential self-interest behavior is minimized in the system without budgets, etc. (see e.g., Frow et al., 2010). We also know little about whether and how articulated benefits of “budgetless MCS” are achieved in these organizations and whether and how these may result in superior organizational performance. This study seeks to contribute to filling this knowledge gap by analyzing the experience of two large multinational companies (hereafter, OilCo and TelCo) that have applied the ideas of BB in management practices. In doing this, we aim to develop a more nuanced view of the change process from the perspectives of the managers involved. The point of departure for our study is that the most important problem of budgeting is establishment and maintenance of “comfort zones” of decision-makers (Bogsnes, 2009). Even though Bogsnes (2009) does not explicitly define “comfort zone”, he discusses it in relation to the necessity of organizations to introduce stretch targets, which suppose to result in decision-makers leaving their comfort zones. Accordingly, the “comfort zone” is a mental state characterized by a decision-maker operating with a sense of comfort and security. Introduction of new MCS without budgets is expected to change the structure and nature of the information flow in the organization so that decision-makers are moved to “stretch zones”. A “stretch zone” is supposed to be a new and different mental state where a decision-maker can experience a new and different type of behavior. Therefore, we should expect changes in the ways information is used. Based on this expectation, the aim of this paper is to study the following questions: How has change in the design principles of MCS based on implementing the ideas of BB influenced transition of decision-makers from “comfort” to “stretch” zones? How has this transition changed the supply of and demand for managerial information? This paper's starting point is based on research evidence that shows that many organizational problems are associated with using budgets. In those companies that abandoned budgeting practices and introduced new management control practices, the budget was no longer considered applicable and desirable, especially when trying to accomplish both predictable goal achievements and the pursuit of strategic initiatives. Thus, this paper puts forth a previously neglected research context of companies that claim to have abandoned budgeting. We analyze the consequences of departing from a budget-based MCS through the prism of establishing, maintaining, and changing the “comfort zones” of decision-makers. In two cases, we illustrate how changes in the design of the MCS can create new management practices. In particular, this paper illustrates how use of new information provided by the MCS design, which is based on new principles, move decision-makers into the “stretch zone” characterized by new characteristics of decision-makers’ mindset and behavior. We also show how this transition improves managerial decision-making abilities as well as why and how use of the supply of and demand for information is different from the previous budget-coupled practices. In the “budgetless” organization, information in the “stretch zone” is supposed to be used in order to be proactive, more forward-looking, and externally and strategically oriented; but how is it done in practice, in what way, and with what consequences for individual decision-makers and their previously established “comfort” zones? First, this paper suggests that abandoning the budget is a result of “discomfort” with the “comfort” role of budgeting where the business-driven and entrepreneurial mindset of decision-makers collides with the ritualistic and gaming behavior induced by budgets. Transition toward a “stretch” zone manifests the intention to remove previously established decision-maker “comfort” zones that characterized the use of information in the budgeting regime. Second, based on empirical evidence from two companies, this paper argues that moving decision-makers out of their previously established “comfort” zones required a new information supply. Unbundling target setting, forecasting, and dynamic resource allocation into three separate processes constitutes a significant move toward creating different tools to facilitate different decision-making purposes required by the “stretch” zone. Third, new information supply enabled better forward-looking and strategy-oriented decisions in situations requiring negotiation and learning, which facilitates the move of decision-makers into the performance “stretch zone”. This paper is organized as follows. First, we provide a literature review where we discuss the transition from “comfort” to “stretch” zones and its effects on supply and use of managerial information. This is followed by Section 3, which explains the methodological choices of the research design and validity. In Section 4, the relationship between the changes in the MCS design, and information supply and use is illustrated on the basis of evidence from the two companies. Finally, we discuss the findings as well as outline the paper's limitations and suggest avenues for further research.

The aim of this paper was to study how changes in the MCS design principles based on implementing the ideas of BB in a research context of two multinational companies have influenced the transition of decision-makers from “comfort” to “stretch” zones, and how this transition changed the supply of and demand for managerial information. We conclude that “discomfort” with the establishment and maintenance of the “comfort” zones for decision-makers by annual budgeting forced the organizations to experiment with the new MCS. Implementing BB was meant to change information supply, i.e., to unbundle the information compressed into budgets related to target setting, forecasts, and resource-allocation processes. In two reasonably similar organizational contexts, this paper illustrates how new information from an MCS based on the new design principles facilitated transition in the mindset and behavior of decision-makers in various situations as well as why and how information use in these situations has become different from previous budget-focused practices. Thus, on the basis of empirical evidence from two companies, we conclude that BB practices help design a new type of MCS and information supply with the aim of moving decision-makers into the “stretch” zone. BB is thus a search for new and more nuanced “comfort” zones, where decision-makers will be, to an increasing degree, able to positively appreciate the entrepreneurial and challenging nature of managerial work and also be able to use new information for increasing interaction with the internal and external business environment, as well as for negotiations and learning. This paper is only the first step in exploring BB practices and further studies are needed to follow up on these two companies and other organizations experimenting with BB in order to comprehend the nature and implications of changes in their managerial practices. Compared with previous studies of BB practices (e.g., Hansen et al., 2003 and Libby and Lindsay, 2009), this study contributes to a better understanding about how organizations that perceive budgeting as a problematic practice change their MCS and information supply and how individuals in organizations change ways of using information. Furthermore, instead of focusing on BB as a small operational change where the main change is to switch employee compensation from budget-based to relative performance contracts (Hansen et al., 2003 and Hansen, 2011) or only the diffusion of the label “beyond budgeting” (Becker, 2011 and Libby and Lindsay, 2009), we build on Østergren and Stensaker (2011) in focusing on BB as a change in mindset when budget functions are unbundled. We developed these ideas following Burchell et al. (1980), who focus on different decision-making situations and how information is used in different situations. What is particularly important is that this transformation seems to be not only a matter of changes in accounting techniques (e.g., in terms of supply and use of information), but also a matter of change in the mindset of managers/controllers and in their ways of behaving around and communicating about core business, external and internal environment, role of people and organizations in society, etc. This has implications for the MCS design theories: the question of MCS design should address the effects it creates for individual decision-makers and, e.g., how it influences their “comfort”, “discomfort”, and “stretch” zones. These new theoretical artifacts of BB can be studied as a new “accounting regime”,5 depicting the importance of understanding its effects on economic, political, and ideological dimensions. We have shown that changes in the accounting dimension are very much based on the application of well-known accounting practices (e.g., rolling forecasts, target setting, etc.). What is new and worth further study is how these “hard” accounting techniques are coordinated and mobilized, and especially balanced with more “soft” performance measures using words instead of numbers. If we look at the organizations from a dimension of power and politics, what are the implications of BB on the changes in the accountability relations in the system, especially when the accountability focus has shifted from limiting costs to sound managerial judgment? In that case, how has the substitution of hierarchy with individual reflexivity, where the individual is supposed to be able to judge if the decision is right, improved the ability of individuals and organizations to learn? Many organizations have joined the BB movement over time and many more will join it in the future, which will provide an interesting setting for research. Thus, researchers can study how and under what circumstances these management practices work in order to build better theories that are useful for accounting practice (see e.g., Malmi and Granlund, 2009). Further studies are needed (as also suggested by Jones and Dugdale, 2001) to track regimes to observe their waxing and waning over time and geography to see their movement from organization to organization and from country to country. Furthermore, it is interesting to identify different variations in accounting regimes, their differences in the degree of internal integration, their relationships with other systems, and their influence on forms of governance. The final step would be to draw from all these studies in order to develop a comparative view of the ways in which accounting and MCS influence the social structures of modern society, the agency of human beings, and the relationship between the two. The more practical implication of our study demonstrates that it is important that top managers in organizations have the ability to recognize and evaluate the limits of their MCS. As design is never perfect, there needs to be continuous mobilization of the design and changes to the organizations around the new information systems (Mouritsen, 2005). Organizations that experiment with their MCS should be prepared to discover that abandoning budgets and introducing a new MCS should never be seen as a “destination”, but rather as a “journey”.