Dual use of budgeting in uncertainty contexts: Explorative study of senior sales and marketing managers - Archive ouverte HAL Access content directly
Reports Year : 2008

Dual use of budgeting in uncertainty contexts: Explorative study of senior sales and marketing managers

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Carla Mendoza
  • Function : Author
M. Besson

Abstract

For many companies, budgets are a key instrument to control behaviour, relying on individual target-setting and performance evaluation based on accounting performance measures. However, in perceived environmental uncertainty (PEU) situations, budgeting faces two difficulties: setting realistic objectives in a poorly predictable context while at the same time achieving a fair performance evaluation when uncertainty has affected results and their controllability. Based on prior accounting literature and Simons' framework (1990, 1995), we explore the use of budgets in PEU situations in a qualitative study. We conducted a field-based study and interviewed 14 senior sales and marketing managers from various industries, using projective techniques imported from psychological research. Our field results confirm an interactive use of budgets in PEU situations and highlight two practices: (1) intense interactive debate and dialogue at all organisational levels, both at target-setting time and throughout the year; and (2) additional use of non-accounting, more subjective performance evaluations. However, we also find that beyond this interactive use, budgets remain important for short-term performance evaluation and achieving the company's global budgetary objectives. Work-based arrangements facilitate this "dual use" of budgeting. Our findings suggest that a process of mutualisation--risk- and effort-sharing--takes place, emphasising achievement of the company's overall budgetary objectives promised to the shareholders. This process fosters a more collective, global management of uncertainties while simultaneously allowing individual performance evaluation.
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Dates and versions

hal-00578994 , version 1 (22-03-2011)

Identifiers

  • HAL Id : hal-00578994 , version 1

Cite

Hélène Löning, Carla Mendoza, M. Besson. Dual use of budgeting in uncertainty contexts: Explorative study of senior sales and marketing managers. 2008. ⟨hal-00578994⟩

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