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How do controllers and managers interpret budget targets?

How do controllers and managers interpret budget targets? Purpose – The purpose of this study is to further our understanding of how and why interpretations of budget targets differ from one person to another even in the same business unit. Design/methodology/approach – A qualitative case study research approach is adopted, involving a review and analysis of the literature and interviews conducted among controllers and managers of a highly successful business unit. Findings – Both the theoretical and empirical results suggest that organizational budgetary processes do not provide a similar understanding of budget targets for each person. While some shared interpretations are evident, individual‐level variations occur in the personal and subjective meanings that controllers and managers give to budget targets in their own consciousness, situationality and corporeality. A personal historical basis for understanding may impact a manager's interpretation of budget targets, but the interpretations can also be dynamic and change over time. Research limitations/implications – The study is both facilitated and limited by its basic assumptions and approaches, and the findings may be most relevant to companies with similar profiles. Nevertheless, the study furthers our understanding of the characteristics of controllers and managers and their perception of the meaning of this important feature of accounting in practice. Practical implications – It could be highly useful to jointly discuss the intended primary purposes and nature of organizational budget targets. Otherwise, people may understand targets in different and perhaps even contradictory ways, which could in turn impair the functioning of control systems. Originality/value – This paper contributes to current budgeting research in that it interprets individual‐level differences. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

How do controllers and managers interpret budget targets?

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1832-5912
DOI
10.1108/18325911111164187
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this study is to further our understanding of how and why interpretations of budget targets differ from one person to another even in the same business unit. Design/methodology/approach – A qualitative case study research approach is adopted, involving a review and analysis of the literature and interviews conducted among controllers and managers of a highly successful business unit. Findings – Both the theoretical and empirical results suggest that organizational budgetary processes do not provide a similar understanding of budget targets for each person. While some shared interpretations are evident, individual‐level variations occur in the personal and subjective meanings that controllers and managers give to budget targets in their own consciousness, situationality and corporeality. A personal historical basis for understanding may impact a manager's interpretation of budget targets, but the interpretations can also be dynamic and change over time. Research limitations/implications – The study is both facilitated and limited by its basic assumptions and approaches, and the findings may be most relevant to companies with similar profiles. Nevertheless, the study furthers our understanding of the characteristics of controllers and managers and their perception of the meaning of this important feature of accounting in practice. Practical implications – It could be highly useful to jointly discuss the intended primary purposes and nature of organizational budget targets. Otherwise, people may understand targets in different and perhaps even contradictory ways, which could in turn impair the functioning of control systems. Originality/value – This paper contributes to current budgeting research in that it interprets individual‐level differences.

Journal

Journal of Accounting & Organizational ChangeEmerald Publishing

Published: Sep 20, 2011

Keywords: Budgets; Case study research; Targets

References