Inara K. Scott

Beyond Budgeting: Distinguishing Modes of Adaptive Performance Management

Abstract Purpose: The purpose of this study is to analyze the changes organizations can adopt to move beyond budgeting. We show how these changes can be understood as modes of adaptive performance management that explains the ways in which organizations move beyond budgeting to become more adaptive. The proposed modes are then used to derive propositions for future research. Methodology/approach: We follow a conceptual approach through an analysis of the beyond budgeting principles using the management and systems literatures on radical decentralization. We theorize how organizations can enhance their adaptability to environmental uncertainty through changes to their management structure and control processes. Findings: We show that organizations can move beyond budgeting by decentralizing within or beyond their management structure and modifying or removing their budget-based control processes. We propose that beyond budgeting can be conceptualized as four modes of adaptive performance management: better budgeting, advanced budgeting, restricted budgeting, and nonbudgeting. Research limitations/implications: The four modes of adaptive performance management can be used in future research to consider how changes to management structures and budget-based control processes can enhance the organizational adaptability needed to manage environmental uncertainty. Practical implications: We show that while the nonbudgeting mode may be most suited to organizations facing high levels of environmental uncertainty, organizations facing low–to-moderate levels of environmental uncertainty can achieve sufficient levels of adaptability with less extensive changes to management structure and budget-based control processes. Originality/value: The four modes of adaptive performance management reflect different approaches for dealing with environmental uncertainty. Positioning nonbudgeting as one mode and identifying alternate modes of adaptive performance management provides a basis for comparing and understanding the changes organizations make to move beyond budgeting.

Law, Management, and Strategy: Collapsing Boundaries and Managing the Interstices

Law undergirds the capitalist system and is “at the interface” of business and social relationships but remains largely walled off from many traditional approaches to management education, scholarship, and practice. Although a simple definition of law is “enforceable rules between individuals and individuals and society,” law is also a medium by which relationships among and obligations between management and internal and external stakeholders are negotiated and formalized. Law can also drive (or impede) innovation by creating new rights (or burdening new business models with undue regulation) and promote (or prevent) social change by setting the boundaries for acceptable corporate actions. Legal rules for disclosure and corporate governance can and have changed the rules of engagement between organizations and their internal and external stakeholders. Environmental regulations, complemented by responsible corporate decision-making, can profoundly affect the long-term viability of industries and of humans’ ability to coexist with the natural environment. Law, and management of legal dimensions of business, should be seen as inseparable from strategy, ethics, stakeholder engagement, and sustainability. This interdisciplinary panel includes both legal and management scholars who focus in their teaching and research on these topics. As a matter of execution, this panel will also be at the interface: roughly half the time is budgeted for Q&A and conversation with attendees, moderated with a clear goal in mind. The goal is to stimulate awareness and actionable “take-away” ideas that (1) involve law and (2) relate to the teaching, research, and practice of strategy, business ethics, stakeholder engagement, and sustainability.