Abstract:
This study theoretically develops the exploratory findings from Hansen and Van der
Stede (2004), regarding alternative reasons to budget (RtB) in firms. Four
operational RtB’s are proposed, which are developed from the two operational RtB’s
used by Hansen and Van der Stede (2004). Using a similar theoretical framework to
that used in their study, propositions are developed and tested between firm
characteristics, RtB importance, budgetary characteristics, RtB benefits and firm
performance. The four RtB’s are shown to relate differently to firm and budgetary
characteristics. Also, by adopting a more robust path analysis model using Partial
Least Squares (PLS) regression and considering budgetary characteristics as
intervening and not additive variables, results consistent with and counter to that
expressed in prior budget research are found. These findings emphasise the
importance of studying alternative RtB’s collectively. They also pose interesting
questions for future research to address when considering the relevance of firm and
budgetary characteristics to the importance and benefits from alternative RtB’s.
