Peter Brownell

The role of budgets in organizations facing strategic change: an exploratory study

Abstract Recent attention in the general management literature has focused on mechanisms and processes used by organizations to respond and adapt to changes in their operating environment. There is, however, very little broad-based empirical research examining the role that management accounting control systems can play in shaping organizational change. Much of the empirical research to date has focused on the role of accounting as a diagnostic tool for assessing and rewarding managerial performance despite the recognition that accounting can serve as a dialogue, learning and idea creation machine ( Burchell et al., 1980 . Accounting Organisations and Society 5,5–27). The purpose of this study is to explore how accounting can serve this alternative role. We use (Simons, R. 1990.) Accounting Organisations and Society 15, 127–143). interactive/diagnostic classification of management control systems to capture how accounting can be used as a learning machine in the formulation and implementation of strategic change. A theoretical model is developed to examine the relationship between strategic change, style of budget use and performance. It is argued that an interactive style of budget use can mitigate the disruptive performance effects of the strategic change process. The data, collected from Chief Executive Officers in 63 public hospitals, provide results that are consistent with our expectations.

The role of accounting data in performance evaluation, budgetary participation and organizational effectiveness

The relationship between managerial leadership styles and measures of organizational effectiveness, such as performance of subordinates, is an unsettled issue in management accounting research. Despite preliminary evidence by Argyris [1952], and later by DeCoster and Fertakis [1968], that the effectiveness of budgetary systems is associated with supervisory leadership style, subsequent research has produced inconclusive findings. Two cases in point are the results of Hopwood [1972] and Otley [1978]. Hopwood found that a leadership style characterized by a heavy emphasis on budget-related performance was significantly associated with job-related tension (JRT). He went on to speculate that JRT would be dysfunctional for performance. Otley, attempting to replicate and extend Hopwoods work, explored the relationship between leadership style and performance, hypothesizing that the tension-producing style found by Hopwood would be associated with inferior subordinate performance. Although his results were inconclusive, they suggested that superior performance levels were associated with a budget-focused leadership style. This paper reports the results of a study undertaken in an attempt to reconcile the results of Hopwood and Otley. In the study, I hypothesized

Management control systems in research and development organizations: The role of accounting, behavior and personnel controls

Abstract This paper reports the result of an empirical study examining the role of accounting and non-accounting controls in a research and development setting. The paper draws on Perrows model of technology and structure to explore the influence of task characteristics on the effectiveness of accounting, behavior and personnel forms of control (Perrow, 1970). The main contribution of the study is the finding that non-accounting controls, especially personnel forms of control, contribute to organization effectiveness, particularly where task characteristics are not well suited to the use of accounting-based controls. In addition, the results suggest that of the two task dimensions examined, task analyzability and number of exceptions, the latter proves to have the more significant influence on the suitability of the controls. “Programmed” types of controls (such as either accounting or behavior controls) appear unsuitable where number of exceptions is high.

Task uncertainty and its interaction with budgetary participation and budget emphasis: Some methodological issues and empirical investigation

Abstract This paper reports the results of a study which re-examines Brownell & Hirst ( Journal of Accounting Research , Autumn 1986). In that study, it was hypothesized that Brownells result ( Journal of Accounting Research , Spring 1982), showing that budget participation and budget emphasis in evaluation should be aligned, would hold only where task uncertainty was low. With managerial performance as the criterion, Brownell & Hirst were unable to find support for the hypothesis. This study incorporates variations in measurement and sampling and finds results which provide strong support for Brownell & Hirsts hypothesis.

Reliance on Accounting Information, Budgetary Participation, and Task Uncertainty: Tests of a Three-Way Interaction

A series of studies reported in this Journal has addressed the question of whether evaluative styles of managers, which vary in terms of their reliance on accounting-based performance assessments, have systematically different behavioral consequences. These studies have produced conflicting results. In particular, Otley [1978] failed to confirm Hopwoods [1972] earlier findings that evaluative styles dominated by a heavy reliance on accounting performance measures, or a high budget-emphasis (BE), had adverse effects on job-related tension (JRT) and managerial performance. In two independent attempts to reconcile this conflict, Brownell [1982] found that a high (low) BE had positive effects on performance so long as budget participation is also high (low), and Hirst [1983] found that a high (low) BE is associated with low JRT in situations of low (high) task uncertainty. In this paper we report the results of a study which links the Brownell and Hirst attempts to reconcile the above conflict. More specifically, our objective was to assess the extent to which Brownells finding also depends on the level of task uncertainty, the primary independent variable in the Hirst study. Arguments are presented which predict that

BUDGETARY SYSTEMS AND THE CONTROL OF FUNCTIONALLY DIFFERENTIATED ORGANIZATIONAL ACTIVITIES

Considerable attention has been given to the question of the role of budget systems in the control of organizations which differ in terms of characteristics such as size, structure, and diversity (Bruns and Waterhouse [1975] and Merchant [1981]). By contrast, little attention has been directed to the broader question of how characteristics of different functional activities within the organization-e.g., marketing versus R&D-influence the effectiveness of control strategies such as the degree of participation in budget setting and the reliance placed on accounting information in control. Of course, the two questions are related in that differing functional activities are typically structured differently in response to various environmental determinants, and this in turn will influence the choice of controls to be used in each. This paper reports the results of an empirical investigation in which the marketing and R&D units of a large electronics firm were compared in terms of both the environmental conditions they face and the effects of their control system choices on managerial performance within the two functional areas. The results provided limited support for predicted