The Appropriateness of Tight Budget Control in Public Sector Organizations Facing Budget Turbulence

Posted: 24 Apr 2014

See all articles by Tobias Johansson

Tobias Johansson

Örebro University - School of Business

Sven Siverbo

Karlstad Business School

Date Written: April 24, 2014

Abstract

In the public sector, budget deviations are an important performance dimension. Because of political and institutional pressures, it is crucial that public sector organizations neither overspend, nor underspend. Budget deviations actualize the issue of tight budget control. In this article we hypothesize that when public sector organizations face budget turbulence, the implementation of tight budget control is a functional response that increases the likelihood of meeting budget targets. Our study, combining survey and archival data from 196 Swedish municipalities, confirms our hypothesis. If budget turbulence is substantial, public sector organizations benefit from tight budget control as they seek to control budget deviations, but if turbulence is only marginal, they can conduct activities in the same manner as last year and additional direction from tight controls has no effect on budget deviations. A more general contribution of the paper is the evaluation of the effect of environment and tight budgetary control fit on budgetary performance.

Keywords: management control, tight budget control, cost control, budget deviation, turbulence, public sector, contingency theory, construct

JEL Classification: M4

Suggested Citation

Johansson, Tobias and Siverbo, Sven, The Appropriateness of Tight Budget Control in Public Sector Organizations Facing Budget Turbulence (April 24, 2014). Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2428604

Tobias Johansson (Contact Author)

Örebro University - School of Business ( email )

Örebro, SE-701 82
Sweden

Sven Siverbo

Karlstad Business School ( email )

Sweden

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,571
PlumX Metrics