When Organisations Deinstitutionalise Control Practices: A Multiple-Case Study of Budget Abandonment

Abstract

Drawing on a framework of deinstitutionalisation, this study explores the abandonment of budgeting through a multiple-case study of four companies. The findings illustrate how a number of antecedents to deinstitutionalisation acted in each setting and show that abandonment was only achieved through skilful agency by dominant insiders to construct the need and manage for change. In addition, a finding of the study is that two of the four companies reversed the deinstitutionalisation and reintroduced traditional budgeting. This is explained by highlighting the role of remnants of formerly institutionalised practices and by demonstrating the importance of administrative and cultural controls which can support the abandonment of a central accounting control practice in the first place. Overall, this research extends previous studies of deinstitutionalisation by analysing a taken-for-granted practice at the micro-level and by giving a more agentic account of its processes.

Acknowledgements

Previous versions of this paper were presented at the New Directions in Management Accounting Conference in Brussels (2010), at the EAA Annual Congress in Rome (2011), and at the ENROAC Conference in Lisbon (2011). I thank participants in these events for their helpful suggestions. In addition, I would like to thank Diane-Laure Arjaliès, Nicolas Berland, John Burns, Janne Järvinen, Caroline Lambert, Afshin Mehrpouya, Martin Messner, Sven Modell, Keith Robson, and Samuel Sponem as well as the editor and two anonymous reviewers for their helpful discussion and comments. The financial support of the Hanns Seidel Foundation is gratefully acknowledged.

Notes

¹As, for example, Morlidge and Player (2010) argue, this does not mean that rolling forecasts could not be useful as a starting point to implementing Beyond Budgeting.

²Saying that budget abandonment is understood as discontinuing fixed targets does not simultaneously imply that many organisations practice this in the first place. As Libby and Lindsay (2010) recently showed for a sample of Canadian and US organisations, this practice is less prevalent than expected. The organizations in this study, however, all used fixed targets before the changes.

³The term ‘non-budgeting’ is used as a direct adoption from one of the case companies studied. It is given preference over ‘non-budget management’ (Ax & Bjørnenak, 2005, p. 6) and ‘management control without budgets’ (Østergren & Stensaker, 2011), not only because it is grounded in practitioner terms, but also because it is succinct.

⁴The authors, however, study the abandonment of the tradition of a bonfire at a US university and stress the particularity of traditions as opposed to institutions in that the former are a source of continuity with the past, a cultural inheritance, and an actively preserved repository of collective memories and identities. Despite using the term ‘traditional budget’ from the literature later on, it is pointed out that budgets are here regarded as an institutionalised practice rather than a tradition since importantly, traditions are conceptualised through a relaxation of the ‘taken-for-grantedness’.

⁵Building on Greenwood et al. (2002), Munir (2005) sensitised for this issue on the field level by underlining that it is change agents who bring events to the attention of other participants, who ‘theorise’ these as relevant, and only therefore make them significant and consequential for change. Recently, Smets et al. (2012) have adopted this thinking at the micro-level and have called it ‘normative reorienting’.

⁶This was done to have a sufficient number of organisations in the sample. The three countries were chosen because they have similar cultural and language characteristics and to keep travel costs low.

⁷Some interviewees were very diligent, clarifying, and adding aspects in the transcript. In one organisation, the case findings were presented and discussed in a feedback meeting which helped check the plausibility of conclusions.

⁸Figure 1 contains planning and resource allocation controls since it is here where the organisations would make changes to increase their responsiveness, to become more decentralised, and to empower their employees. The abandonment of fixed targets relates to performance evaluation.