Practice Developments in Budgeting: An Overview and Research Perspective
Stephen C. Hansen
Naval Postgraduate School
Wim A. Van der Stede
London School of Economics & Political Science (LSE)
Practitioners in Europe and the U.S. recently have proposed two distinct approaches to address what they believe are shortcomings of traditional budgeting practices. One approach advocates improving the budgeting process and primarily focuses on the planning problems with budgeting. The other advocates abandoning the budget and primarily focuses on the performance evaluation problems with budgeting. This paper provides an overview and research perspective on these two recent developments. We discuss why practitioners have become dissatisfied with budgets, describe the two distinct approaches, place them in a research context, suggest insights that may aid the practitioners, and use the practitioner perspectives to identify fruitful areas for research.
Number of Pages in PDF File: 40
Keywords: budgeting, planning, strategy, activity based budgeting
JEL Classification: M40, M46
Date posted: September 28, 2003
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