Measuring 'Tight Budgetary Control'
Posted: 22 Feb 2001
This paper presents an effort to construct a measurement instrument to capture tight budgetary control. While there is not a strong tradition of publishing articles of this nature in the accounting literature, there is a role for this for constructs for which there are no ready-made instruments available from other disciplinary areas. The notion of tight (budgetary) control seems to fall into this category: it has troubled theorists for many years (Simons, 1995), and identifying and calibrating its components has been called a fruitful area for academic inquiry (Chow, et al., 1996).
In this paper, the tight budgetary control macro-construct is defined, de-composed into its micro-attributes, operationalized into scale-items, and re-composed empirically through factor analysis on data obtained from 153 business units. The data suggest that tight budgetary control involves, in order of importance, low tolerance for interim budget deviations, detailed budget line-item follow-ups, intense discussions of budget results, and strong emphasis on meeting short-run budget targets. Broadly speaking, tight budgetary controls seem more stringent than simply monitoring bottom-line budget deviations in a hands-off management-by-exception basis.
JEL Classification: M40, M46
Suggested Citation: Suggested Citation