Effects of using static and flexible budgets on process and product innovation
DOI:
https://doi.org/10.11606/issn.1982-6486.rco.2021.180829Keywords:
Static budget, Flexible budget, Process innovation, Product innovationAbstract
This study analyzes the effects of using static and flexible budgets on process and product innovation. A survey was conducted with managers of companies benefited by the Brazilian Law No. 11,196 of November 21, 2005, known as Lei do Bem (Law of Good), obtaining 133 valid answers. Partial least squares structural equation modeling was applied to test the hypotheses. Additionally, an importance-performance maps analysis was used. The results indicate a positive and significant relationship between both static and flexible budgets with process innovation and product innovation. Static budget exhibits greater importance toward process innovation, while flexible budget exhibits greater importance toward product innovation. Overall, the findings reinforce the complementarity of static and flexible budgets in relation to technological innovation. These results contribute to the literature on Management Control Systems, specifically on the usefulness of the budgets, in addition to practical contributions to management, as in the case of innovative companies benefited by the Law of Good.
Downloads
References
Ahrens, T., & Chapman, C.S. (2004). Accounting for flexibility and efficiency: a field study of management control systems in a restaurant chain. Contemporary Accounting Research, 21(2), 271-301. DOI: https://doi.org/10.1506/VJR6-RP75-7GUX-XH0X
Bedford, D.S. (2015). Management control systems across different modes of innovation: Implications for firm performance. Management Accounting Research, 28, 12-30. DOI: https://doi.org/10.1016/j.mar.2015.04.003
Bedford, D.S., Bisbe, J., & Sweeney, B. (2019). Performance measurement systems as generators of cognitive conflict in ambidextrous firms. Accounting, Organizations and Society, 72, 21-37. DOI: https://doi.org/10.1016/j.aos.2018.05.010
Bedford, D.S., Malmi, T., & Sandelin, M. (2016). Management control effectiveness and strategy: an empirical analysis of packages and systems. Accounting, Organizations and Society, 51, 12-28. DOI: https://doi.org/10.1016/j.aos.2016.04.002
Burns, T., & Stalker, G.M. (1961). The management of innovation. London: Tavistock.
Camisón, C., & Villar-López, A. (2014). Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of Business Research, 67(1), 2891-2902. DOI: https://doi.org/10.1016/j.jbusres.2012.06.004
Cassar, G., & Gibson, B. (2010). Budgets, internal reports, and manager forecast accuracy. Contemporary Accounting Research 25(3), 707-737. DOI: https://doi.org/10.1506/car.25.3.3
Chenhall, R.H., & Moers, F. (2015). The role of innovation in the evolution of management accounting and its integration into management control. Accounting, Organizations and Society, 47, 1-13. DOI: https://doi.org/10.1016/j.aos.2015.10.002
Chtioui, T., & Dubuisson, S.T. (2020). Towards a communication-based typology of management control modes: showing the relevance of communicative action for entrepreneurial settings. International Journal of Entrepreneurship and Small Business, 39(1-2), 163-191. DOI: https://doi.org/10.1504/IJESB.2020.104249
Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2. ed.). New York: Psychology Press.
Dal Magro, C.B., & Lavarda, C.E.F. (2015). Evidências sobre a caracterização e utilidade do orçamento empresarial nas indústrias de Santa Catarina. Advances in Scientific and Applied Accounting, 8(1), 039-062. DOI: https://doi.org/10.14392/asaa.201581039-062
Dugdale, D., & Lyne, S. (2008). Budgeting and organizational structure. Research Executive Summaries - CIMA, 6(4), 1-7.
Dunk, A.S. (2011). Product innovation, budgetary control, and the financial performance of firms. The British Accounting Review, 43(2), 102-111. DOI: https://doi.org/10.1016/j.bar.2011.02.004
Ekholm, B.G., & Wallin, J. (2000). Is the annual budget really dead? European Accounting Review, 9(4), 519-539. DOI: https://doi.org/10.1080/09638180020024007
Ekholm, B.G., & Wallin, J. (2011). The impact of uncertainty and strategy on the perceived usefulness of fixed and flexible budgets. Journal of Business Finance & Accounting, 38(1‐2), 145-164. DOI: https://doi.org/10.1111/j.1468-5957.2010.02228.x
Frow, N., Marginson, D., & Ogden, S. (2010). “Continuous” budgeting: reconciling budget flexibility with budgetary control. Accounting, Organizations and Society, 35(4), 444-461. DOI: https://doi.org/10.1016/j.aos.2009.10.003
Grabner, I., & Moers, F. (2013). Management control as a system or a package? Conceptual and empirical issues. Accounting, Organizations and Society, 38(6-7), 407-419. DOI: https://doi.org/10.1016/j.aos.2013.09.002
Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662-676. DOI: https://doi.org/10.1016/j.ijpe.2011.05.014
Hair Jr., J.F., Hult, G.T.M., Ringle, C.M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM) (2. ed.). Los Angeles: Sage
Hair Jr., J.F., Risher, J.J., Sarstedt, M., & Ringle, C.M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2-24. DOI: https://doi.org/10.1108/EBR-11-2018-0203
Hansen, S.C., Otley, D.T., & Van der Stede, W.A. (2003). Practice developments in budgeting: an overview and research perspective. Journal of Management Accounting Research, 15(1), 95-116. DOI: https://doi.org/10.2308/jmar.2003.15.1.95
Henri, J.F. (2006). Management control systems and strategy: A resource-based perspective. Accounting, Organizations and Society, 31(6), 529-558. DOI: https://doi.org/10.1016/j.aos.2005.07.001
Henri, J., Massicotte, S., & Arbour, D. (2019). Exploring the consequences of competing uses of budgets. Australian Accounting Review, 30(4), 257-268. DOI: https://doi.org/10.1111/auar.12287
Hope, J., & Fraser, R. (2003) Beyond budgeting: how managers can break free from the annual performance trap. Boston: Harvard Business School Press.
Horngren, C.T., Foster, G., & Datar, S.M. (2000). Cost accounting: a managerial emphasis. (10. ed.). New Jersey: Prentice Hall.
Khandwalla, P.N. (1972). The effect of different types of competition on the use of management controls. Journal of Accounting Research, 10(2), 275-285. DOI: https://doi.org/10.2307/2490009
Laitinen, E.K., Länsiluoto, A. & Salonen, S. (2016). Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms. Journal of Management Control, 27(4), 293-322. DOI: https://doi.org/10.1007/s00187-016-0237-2
Libby, T., & Lindsay, R.M. (2007). Beyond budgeting or better budgeting? Strategic Finance, 89(2), 46-51.
Lopez-Valeiras, E., Gonzalez-Sanchez, M.B., & Gomez-Conde, J. (2016). The effects of the interactive use of management control systems on process and organizational innovation. Review of Managerial Science, 10(3), 487-510. DOI: https://doi.org/10.1007/s11846-015-0165-9
Matějka, M., Merchant, K.A., & O'Grady, W. (2020). An empirical investigation of beyond budgeting practices. Journal of Management Accounting Research. In press. DOI: https://doi.org/10.2308/jmar-19-010
Mucci, D.M., Frezatti, F., & Dieng, M. (2016). The multiple functions of budgeting. Revista de Administração Contemporânea, 20(3), 283-304. DOI: https://doi.org/10.1590/1982-7849rac2016140121
Organização de Cooperação e Desenvolvimento Econômico (OCDE). (2005). Manual de Oslo: diretrizes para coleta e interpretação de dados sobre inovação (3. ed.). Brasília: FINEP.
Otley, D. (1999). Performance management: a framework for management control systems research. Management Accounting Research, 10(4), 363-382. DOI: https://doi.org/10.1006/mare.1999.0115
Pazetto, C.F., Mannes, S., & Beuren, I.M. (2020). Influência dos sistemas de controle e da folga de tempo na inovação de processos. RAM. Revista de Administração Mackenzie, 21(3), 1-27. DOI: https://doi.org/10.1590/1678-6971/eramr200147
Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y., & Podsakoff, N.P. (2003). Common method biases in behavioral research: a critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879. DOI: https://doi.org/10.1037/0021-9010.88.5.879
Ringle, C.M., & Sarstedt, M. (2016). Gain more insight from your PLS-SEM results. Industrial Management & Data Systems, 116(9), 1865-1886. DOI: https://doi.org/10.1108/IMDS-10-2015-0449
Samuelson, L.A. (1986). Discrepancies between the roles of budgeting. Accounting, Organizations and Society, 11(1), 35-45. DOI: https://doi.org/10.1016/0361-3682(86)90017-6
Saunila, M., & Mäkimattila, M. (2018). A dynamic learning perspective on innovation control: balancing freedom and constraint. In: Innovation and Capacity Building (pp. 273-291).
Palgrave Macmillan, Cham. DOI: https://doi.org/10.1007/978-3-319-90945-5_14
Schumpeter, J.A. (1982). Teoria do desenvolvimento econômico: uma investigação sobre lucros, capital, crédito, juro e o ciclo econômico. São Paulo: Abril Cultural.
Sponem, S., & Lambert, C. (2016). Exploring differences in budget characteristics, roles and satisfaction: a configurational approach. Management Accounting Research, 30, 47-61. DOI: https://doi.org/10.1016/j.mar.2015.11.003
Tidd, J., Bessant, K. (2015). Gestão da inovação (5. ed.). Porto Alegre: Bookman.
Van der Stede, W.A. (2000). The relationship between two consequences of budgetary controls: budgetary slack creation and managerial short-term orientation. Accounting, Organizations and Society, 25(6), 609-622. DOI: https://doi.org/10.1016/S0361-3682(99)00058-6
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Silvana Mannes, Anderson Betti Frare, Ilse Maria Beuren
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
The RCO adopts the Free Open Access policy, under the standard Creative Commons agreement (CC BY-NC-ND 4.0). The agreement provides that:
- Submission of text authorizes its publication and implies commitment that the same material is not being submitted to another journal. The original is considered definitive.
- Authors retain the copyright and grant the journal the right of first publication, with the work simultaneously licensed under the Creative Commons Attribution License which allows the sharing of the work with acknowledgment of authorship and initial publication in this journal.
- Authors are authorized to take additional contracts separately, for non-exclusive distribution of the version of the work published in this journal (e.g. publish in an institutional repository or as a book chapter), with necessary recognition of authorship and initial publication in this journal.
- Authors are allowed and encouraged to publish and distribute their work online (e.g. in institutional repositories or on their personal page) before or during the editorial process, as this can generate productive changes as well as increase the impact and citation of published work (See The Effect of Free Access).
- The journal does not pay copyright to the authors of the published texts.
- The journal's copyright holder, except those already agreed in the Free Open Access Agreement (CC BY-NC-ND 4.0), is the Accounting Department of the Faculty of Economics, Administration and Accounting of Ribeirão Preto of the University of São Paulo.
No submission or publication fees are charged.
Up to 4 authors per article are accepted. Exceptionally duly justified cases may be reviewed by the Executive Committee of the RCO. Exceptional cases are considered as: multi-institutional projects; manuscripts resulting from the collaboration of research groups; or involving large teams for evidence collection, construction of primary data, and comparative experiments.
It is recommended that the authorship be ordered by contribution of each of the individuals listed as authors, especially in the design and planning of the research project, in obtaining or analyzing and interpreting data, and writing. Authors must declare the actual contributions of each author, filling the letter to the editor, at the beginning of the submission, taking responsibility for the information given.
Authors are allowed to change throughout the evaluation process and prior to the publication of the manuscript. The Authors should indicate the composition and final order of authorship in the document signed by all those involved when accepted for publication. If the composition and authoring order is different than previously reported in the system, all previously listed authors should be in agreement.
In the case of identification of authorship without merit or contribution (ghost, guest or gift authorship), the RCO follows the procedure recommended by COPE.
