Budgeting changes and success: abandonment, reform or stability in Finnish manufacturing firms?

Purpose: The need to change budgeting has been frequently debated. Drawing on the literature on management accounting and budgeting change, this study explores changes in budgeting and whether experienced success of budgeting varied with time and budget type. Changes in the use of the following budget types were investigated: fixed, revised, rolling, flexible and hybrid budgets.

Study design: This study employs a mixed research methodology. Survey data was collected from the same business units of large Finnish manufacturing firms in 2004 (Time 1) and 2016/7 (Time 2) (N=28). In addition, some of the respondents of the latter survey were interviewed in 2023 (Time 3).

Findings: Almost all business units were found to have remained loyal to budgeting. However, changes in budget types were not uncommon and varied considerably. Overall, the use of fixed budgets continued strongly, the use of revised and hybrid budgets declined, and the use of rolling budgets increased over time. Moreover, the joint use of budgets declined. The perceived success of budgetary processes was, initially, weakened by the use of fixed budgets and, later, by the use of revised budgets. The interview data further illustrates some of the patterns of, and reasons behind, the changes.

Originality/value: Longitudinal analysis of change in the same business units was useful in revealing the patterns of change in budgeting and on relationships between the variables analysed over time. Further research could be carried out using more extensive case studies in companies or sector-focused surveys longitudinally.