SSRN Id3104315

In search of a theory of budgeting: A literature review
Staci A. Kenno*
Michelle Lau
Barbara J. Sainty
*corresponding author
1812 Sir Issac Brock Way
St. Catharines, ON
L2S 3A1
skenno@brocku.ca
Electronic copy available at: https://ssrn.com/abstract=3104315

In search of a theory of budgeting: A literature review
Budgeting is synonymous with management accounting research but what is less synonymous is
a cohesive or comprehensive theory of budgeting. As budgeting is used throughout all types of
organizations and in many research articles, future budgeting research may benefit from a
comprehensive review of the theories used by previous budgeting researchers in order to advance
the discussion of the benefits and drawbacks of budgeting. This literature review highlights the
major theories used in budgeting articles as well as the common variables used, causal model
forms identified and use of budgeting in 251 articles. Though we find no cohesive theory of
budgeting we identify the importance of a unified thought process to budgeting research and
provide insights for future work in the area.

INTRODUCTION
Budgeting is synonymous with management accounting research and has a long and
storied history (Key, 1940; Brownell, 1982; Covaleski et al., 2003). What is less synonymous in
budgeting research is a cohesive or comprehensive theory of budgeting (Key, 1940; Malmi and
Granlund, 2009; Gibran and Sekwat, 2009). The multiple needs and uses of budgeting prevail in
all types of organizations and across many industries including, but not limited to, private and
public corporations, higher education, healthcare, government and non-government
organizations. Recent discussions on the demise of budgeting call into question the future of
budgeting research, yet evidence from practice suggests budgeting persists as an important
management accounting tool (Libby and Lindsay, 2010). Future budgeting research may benefit
from a comprehensive review of the theories used by budgeting researchers in order to advance
the discussion of the benefits and drawbacks of budgeting.
In this study, we expand upon Covaleski, Evans, Luft and Shields (CELS) (2003) and re-
visit the theoretical paradigms of budgeting research. CELS examines budgeting research from
three theoretical perspectives with some examples drawn from the literature. Using the criteria
defined by CELS, we provide a comprehensive review of the theoretical underpinnings of
budgeting research by examining articles in 16 accounting journals spanning publication from
1972 to 2016. We classify each article according to its major theory, research methodology, level
of analysis, use of budgeting and, where applicable, causal model form.
Furthermore, research grounded in theory often allows us to examine intricate issues
while offering comprehensive and corroborated explanations for the causes and effects of our
research findings. Using a theory to support, define and analysis research enables us to examine
complex issues and to provide possible framings for their causes and effects. A good theory

establishes a series of relationships among concepts that may not be well defined. Theory is
needed to help explore topics of interest, whether by providing insights into observed actions or
by helping to explain outcomes.
Overall, we find that many papers conform to the perspectives outlined by CELS.
However, many papers do not. Some do not cite any budgeting theory. Some studies build on
previous models or literature with no discussion of theory. Some papers use theories outside of
the three perspectives defined by CELS while many papers frame their work from multiple
theoretical perspectives. By providing this comprehensive analysis of budgeting theories, we
hope to extend the development of budgeting theory and encourage researchers to better provide
principles of explanation and predictions, grounded in theory.
The rest of the article is organized as follows. In the second section we describe our
research methodology and framework for our analysis of the papers. The third section provides
the discussion and analysis of our classification summaries. The fourth section discusses future
opportunities and the final section summarizes our findings.
RESEARCH METHODOLOGY
Method and design
We begin with CELS (2003) as a framework to classify budgeting research according to
the theoretical perspectives of economics, psychology and sociology. Next, we identified a list
of sixteen target journals to guide the selection of articles for inclusion in our review of
budgeting theories. Our sixteen target journals include the generally recognized five top
accounting journals and other highly ranked journals that have published studies in budgeting.
We searched all fields of ABI Inform and ProQuest databases using the search term budget*,

which yielded 651 articles. This initial search parameter ensured that articles using the word
budget (or some form of budget*) would be included in our review.
[Insert Table 1 here]
Table 1 provides a reconciliation of the 651 articles identified and the 251 articles
classified in our study. The broad search term employed identified 355 articles that conducted
research budgeting issues. Through a subsequent review of the remaining articles, we identified
104 articles that consisted of literature reviews, discussion articles, or the like. The remaining
251 articles met the criteria for inclusion in our study. Table 2 presents a summary of the 251
articles classified by target journal and year of publication.
A design checklist, based on CELS (2003) was then used to ensure an article met the
criteria established for budgeting research (see Appendix A for the Classification Worksheet).
We then categorized all articles by the major theory identified in our literature review of each
article. We also included in our analysis articles where no explicit theory was applied.
DISCUSSION AND ANALYSIS OF CLASSIFICATION SUMMARIES
Overview
The three major theoretical paradigms used in accounting research are economic,
psychology, and sociology. Each theoretical paradigm has its own sub-theories, dozens if not
hundreds of possibilities are umbrellaed under each base. We examine the application of each
paradigm as it applies to budgeting research.
Summary of articles with explicit theories mentioned
Economics based budgeting research with theory

A total of 56 papers were identified as drawing upon economic theory in budgeting
research. Within this theoretical perspective 27% of the papers (15) used analytical modeling and
38% of the papers (21) used experimental methods to examine economic budgeting issues.
Economic theory is the only major theory that used all defined methodologies to conduct
budgeting research including archival (7), field/case study (6), survey (9), and other (1). Three
papers used multiple methodologies (see Table 3 Panel A for summary).
Economic theories are rooted in the production, distribution, and consumption of goods
and services, research studies how people and organizations allocate resources to satisfy wants
and needs while ensuring coordinated efforts to achieve maximum potential. Stemming from the
seminal works by Jensen and Meckling (1976) and Ross (1973) agency theory is used
extensively in accounting research (Demski and Feltham, 1978; Kirby et al., 1991; Hobson et al.,
2014). Moreover, agency theory is the most commonly cited theory in this review, “is directed
at the ubiquitous agency relationship, in which one party (the principal) delegates work to
another (the agent), who performs that work. Agency theory attempts to describe this
relationship using the metaphor of a ‘contract’” (Eisenhardt, 1989).
This employer/employee relationship is usually simplified to examining budgeting
practices for individuals as specified by employees. It is not surprising that 79% of the papers
we classified examined economic budgeting practices and their influence on individual
decisions. In an effort to model the owner/principal, several studies (22% - 13 papers) used the
organization as their level of analysis. Therefore, many of these articles provide insights into the
workings of the principal/agent model from a theoretical perspective (analytical methodology)
and from a practical perspective using the other research methodologies.

Level of analysis
As indicated by CELS (2003) the level of analysis from an economic theoretical
perspective is typically the agency relationship, focused on individuals. Of the 56 studies
classified in economic theory, 47 analyze individual decision-making. Within these papers, the
manipulated variables include 16 that are additive, 11 that are independent, and 14 that have a
moderating effect on the variables being studied. It is also interesting to note that all papers
using analytical methodology analyze individual decision-making. This is also true of all but
one paper that uses an experimental methodology.
Ten papers analyze decisions that impact the organization. Four of these papers are field
studies and do not have variables that are manipulated. Variables in three of the remaining
papers interact independently. The variables manipulated in another three papers are additive.
Two papers are archival, two are analytical with one experiment and one survey.
Budget use
From the perspective of agency theory, the principal aims to control the behaviours of the
agent. Therefore, it is not surprising that 29 of the 58 studies (50%) use budgets for control
purposes. The idea of motivation is also a popular theme within agency theory. The second
most common use of budgeting when using economic theories is motivation (36%). Planning
and decision-making are also used to lesser extents (31% and 12% respectively).
Psychology Based Budgeting Research (with theory):
A total of 51 articles were identified drawing upon psychology theory in budgeting
research. Within this theoretical perspective, the major unit of analysis is the individual (86%),

and the majority of papers are divided between experimental and survey methodologies.
Relatively fewer psychology-based budgeting studies apply an alternative methodology (e.g.,
field/case, archival) and only one paper was identified as implementing a multi-method
approach. Although organizations rely on budgeting for many purposes, motivation (e.g., budget
based incentives) as the use of budgeting remains the major focus within psychology-based
literature. See Table 3 Panel B for a summary.
In general, psychology theories are used to understand human thought, emotion and
behavior (reference needed). For a review of major areas of psychology used in management
accounting research see Birnberg, Luft and Shields (2006). In budgeting research, psychology
theories are used to describe and predict how individual behaviors such as motivation are
affected by and affect budgeting (e.g., Collins 1978).
Psychology theory differs from other theories applied in budgeting research in at least
two ways. First, psychology focuses upon behaviors of the individual rather than those at the
organizational or societal level (Birnberg et al., 2006). Second, as Birnberg et al., (2006)
observe, psychology theories are premised on the assumption that individual thought, emotion
and behavior are dependent upon mental representations of the environment that can differ in
important ways from the underlying objective environment. Psychology theories, for example
are used to demonstrate how individual perceptions of procedural fairness affect participative
budgeting and its outcomes (e.g., Lindquist, 1995; Wentzel, 2002; Lau and Tan, 2006).
Moreover, psychology theory allows for deviations from rational behavior such as having control
over the evidentiary process can increase judgments of fairness (Colquitt, 2005).
Contingency theory of accounting emerged and became dominant in the 1970s,
contingency theory of accounting is based on the premise that there is “no universally

appropriate accounting system which applies equally to all organisation in all circumstances”
(Otley, 1980, 413). Understanding the motivating role of budgeting plays a central role in
accounting research. Likewise, expectancy (Vroom, 1964) and goal theory (Locke, 1968)
provides an important foundation for studying the ways in which budgeting motivates effort and
performance. Together, expectancy and goal setting theory are the most commonly cited
psychology based theories identified within budgeting research.
Expectancy theory is rooted in the assumption that agents are able to rationally evaluate
the link between effort, performance and reward (Ronen and Livingstone, 1975; Rockness,
1975). In contrast, goal setting theory assumes less rational behaviors such as goal commitment
as an important antecedent of goal-directed effort (Hollenbeck and Klein, 1987; Locke and
Latham, 2002). These theories have been applied to budgeting research to predict the effects of
budget target difficulty and task characteristics (e.g., task complexity and interdependence) on
performance. Using a resource allocation task, Hirst and Yetton (1999) expand upon goal setting
theory to evaluate budget target difficulty and task interdependence on both the level and
variance of performance.
Level of Analysis
Given the humanistic foundations of psychology, it is unsurprising that the dominant
perspective among psychology-based research examines the individual unit (e.g., mid-level
managers), and to some extent small groups (e.g., teams). These studies examine budget-based
variables as both dependent and independent variables.
Theoretical developments within the field of socioecological psychology examines how
various aspects of the environment including political systems, economic systems, and even
geography can affect individual thinking and behaviour. It is the effects of social and physical

environments on human thought and behavior. In psychology-based accounting research there
has not been much attention to the effects of macro-environment. This can have implications for
budgeting research as few if any studies cross units of analysis to consider them.
Budget-based variables as the independent variable
Many studies examining budget-based variables as an independent variable, study their
effects on individual or small group performance. These budget-based variables include features
of the budgeting process such as budget participation (e.g., Chenhall and Brownell, 1988; Chow,
Cooper and Waller, 1988; Shields and Young, 1993), perceptions of budget fairness (e.g.,
Lindquist, 1995; Libby, 1999; Libby, 2001; Wentzel, 2002; Lau and Lim, 2007), as well as
characteristics of budget-based incentives including budget target difficulty (e.g., Hirst and
Lowy, 1990; Hirst and Yetton, 1999; Fisher, Pfeffer, and Sprinkle, 2003).
Relatively fewer studies consider the outcome of budget-based variables beyond their
effect on effort-related performance. Sprinkle, Williamson and Upton (2008), however, consider
the effort-risk trade-off induced by budget target difficulty and budget-based contracting. In an
experimental setting, Sprinkle et al. (2008) find a non-linear relationship between budget level
difficulty and risk taking such that both low and high budget target difficulty encourage risk
taking over motivating effort. A small group of studies also consider the non-performance effects
of budget-based variables such as individual job satisfaction (Frucot and Shearon, 1991; Choo
and Tan, 1997), organisational commitment (Subramaniam and Mia, 2001) and decision making
(Darcoa, 1984). Budget-based variables as independent variables are also often examined in
combination with features of the task (e.g., task interdependence, job difficulty (Mia, 1989)) and
characteristics of the organizational environment such as decentralization.
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Early research suggests a correlation between personality variables and budget-related
variables (Collins, 1978). Yet, to date few studies examine how individual characteristics interact
with budget-based variables to affect performance and/or other outcomes. Some of the individual
variables examined include, locus of control (Brownell, 1981; Frucot and Shearon, 1991), moral
disengagement (Liessem, Schedlinsky, Schwering and Sommer, 2015), and social value
orientation (Upton 2009). Upton (2009) experimentally examines how different levels of co-
operativeness versus competitiveness and budget-based incentives affect group performance and
co-ordination. Future research may prove fruitful by further considering how individual
characteristics affect budgeting and its outcomes.
Budget-based variables as the dependent variable
The majority of studies examine budget-based variables as the independent variable. Of
the studies that do consider budget based as an outcome variable, many studies focus on budget
slack as the dependent variable (Church, Hannan and Kuang, 2012; Davis DeZoort and Kopp,
2006; Stevens, 2002). In another study, Collins (1978) examines budget attitudes (e.g.,
willingness to support or withhold support of the budget) as a budget-based outcome variable. To
date, there are few psychology-based studies that examine budgeting processes and budget
characteristics as the dependent variable.
Causal model form
As discussed above, psychology-based studies often examine the effects of budget-based
variables on various outcomes (performance, risk taking, organizational commitment etc.) or the
effects of non-budget-based variables on budget-based variables such as slack. The majority of
budgeting research examines the relationship between budgeting and non-budgeting variables
using independent variable interaction (e.g., Libby, 1999) and moderating variable (e.g., Lau and
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Tan, 2006; Subramaniam and Mia, 2001). For example, Libby (1999) considers how the
combination of voice and explanation affects individual performance in a participative budget
setting. Although theory defined variables enable consistent cause-and-effect relations to be
identified (Luft and Shields, 2003), limitations of data analysis techniques restricts the causal
model form appearing throughout the psychology theory-based budgeting literature. Relatively
few psychology-based papers examine a reciprocal recursive causal model form in the budgeting
literature with the exception of Davila and Wouters (2005) who find budgetary slack as
purposeful for achieving organizational goals.
Use of Budgeting
Motivation as the use of budgeting is the primary focus of psychology-based budgeting
research. For example, studies examine performance effects of budget based incentives, and
participative budgeting. There is a growing area of research that examines budgeting used in
planning and decision making, a fruitful area for research as discussed by Libby and Murray
(2010) who initially debate whether budgeting research should be abandoned. In their survey,
they still see strong use of budgets and a need for budgeting research. To better understand
importance, additional research on planning and decision making would be useful.
Sociology-based budgeting research with theory
A total of 50 articles were identified as drawing upon sociology theory in budgeting
research. Within this theoretical perspective, the major level of analysis was the organization
(78%) and the majority of papers are divided between field/case study and survey methodology.
Relatively fewer sociology-based budgeting studies apply an alternative or archival methodology
and there are no analytical or experimental studies at all. Though there were five articles
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identified as having implemented multiple methods, mainly a field study combined with another
methodology (typically other or survey). See Table 3 Panel C for summary.
Institutional and contingency theory are the most commonly applied theories within the
paradigm of sociological accounting research with organizational theory the third most common.
In the set of articles reviewed, 18 of the 50 articles use institutional or neo-institutional theory,
14 use contingency theory and 7 use organizational theory. As the elements of these theories are
concentrated at higher levels of analysis, the organization is the unit of analysis for the majority
of budgeting studies employing a sociological perspective.
Institutional, neo institutional and institutional entrepreneurship have all stemmed from a
prolific set of research that began with DiMaggio and Powell’s iron cage (1983) describing the
coercive, mimetic and normative pressures on institutions. As the theory expanded, neo-
institutional theory emerged, emphasizing the creation, maintenance, and disruption of an
institution as well as the dominant actors and the society surrounding the situation (Scott, 2001;
Lawrence and Suddaby, 2005) orienting research often in the life cycle and arrangements of an
institution.
In general, institutional theory examines how an organization functions, reacts and copes
with different scenarios. As applied to budgeting research, we find a general pattern of inquiry
that examines how organizations introduce, embed or change budgeting to meet their
requirements. At higher levels of analysis, contextual differences are important. Budgeting is
examined in various industries including education and health care (13 total), government and
state owned enterprises.
Neo-institutional theory follows the changes that occur in institutions, and acknowledges
that a change in the institution requires a change in perception, as well as in society, within
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politics and sometimes culturally (Lounsbury and Crumley, 2005). For example, in a series of
articles about the education sector in the UK, Edwards, Ezzamel, Robson and Stapleton explored
change in organizations. Starting with the introduction of a new management system and
budgetary schemes (Edwards et al, 1996), they follow the implementation of the budgeting
system throughout two decades. The accounting practice and budgets are affected by change,
particularly over time how the sector adapted to and reorganized around the financial, political
and social changes (Edwards et al., 1999; Edwards et al., 2005; Ezzamel et al., 2012).
The second most commonly used sociological theory is contingency theory, a theory
based on the effectiveness of management and a subset of organizational theory. As the number
of uses of contingency theory was significant, we decided to separate contingency theory from
organizational theory for accuracy purposes. Their effectiveness is contingent on the connections
between behaviour and situations. In other words, it depends on your circumstances.
Organizational theory, the third most commonly used theory, consists of a variety of
approaches to organizational analysis, Scott (1961) highlights that there are at least four theories
of organizations, rational systems perspective, division of labour, bureaucratic theory, and
contingency theory. Becker (2014) uses organizational theory to demonstrate the importance of
administrative and cultural controls, as two of the four organizations studied returned to
traditional budgeting over deinstitutionalisation.
Level of analysis
Organizations are the typical unit of analysis for field/case studies due in part to the
nature of the methodology and research questions asked using sociological theory. For example,
institutional theory whose name suggests such, lends itself to providing insights into explaining
or reifying their findings within organizations, organizations surrounding environments and
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contexts. Field study research is not concerned with variables as the other methodologies are –
qualitative researchers are not concerned about causal models or those variables, it is about what
the individual or organization is experiencing or what is changing. These field studies often
occur when change is happening, we can learn from changes, alterations, there are lessons in
these contexts.
There are 21 research studies using sociological theories that are identified as having a
causal model form, the most common is the additive model. Lee and Plummer (2007) show that
prior years overspending will have larger impact than underspending as ratcheting of
expenditures is stronger for specific expenses than others. DeBaerdmaeker and Bruggeman
(2015) highlight that increased participation in strategic planning leads to lower budgetary slack
creation by increasing affective commitment to the organization. The second most common
model used was the moderator-variable interaction.
Budget use
Control is the primary focus of the sociology based budgeting studies, 86% of them are
concerned with control, while 40% focus on planning. 50% of the studies were classified as
focused on multiple uses of budgeting. From investigating budgetary slack and motivation (De
Baerdmaeker and Bruggeman, 2015) to budgetary slack and short term orientation (Van der
Stede, 2000) or institutions and agency in a state-owned entity (Gooneratne et al., 2016),
budgeting often commands control in an organization. Still focused on control, we see many
articles concerned with changes in management control systems, how budgets can or will affect
them and the actors in the organization (Christiansen et al., 1997; Marginson, 1999; Van der
Stede, 2000). This idea of control is a very basic concept as a use of budgeting and is present all
major theory categories, methods and models in our database. Covaleski et al (2013) highlight
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the importance of cultural entrepreneurs (instead of institutional entrepreneurs) in the change
process in a new budgetary regime and the politics of welfare regulation.
Alternative theoretical paradigms
We identify ten articles that employ an alternative theoretical paradigm (e.g., grounded
theory, diffusion theory and new public management) that deviates from the standard theoretical
categories of economic, psychology or sociology. Grounded theory provides a set of fastidious
procedures that leads to the creation of conceptual categories (Glaser and Strauss, 1967; Strauss
and Corbin, 1990). As a well-known method, grounded theory can provide insights and allow
examination of budgeting in a variety of contexts. It is often employed in the construction of
theory, using a methodical approach for data gathering and analysis.
Summary of articles with no major theory specified
Of the 251 articles included in our study, 84 did not meet the criteria for inclusion in the
above theoretical categories. In particular, we identify papers that do not use an explicit theory.
As management accounting is an applied field, Malmi and Granlund (2009) recognize that a
clear picture may not exist of identified theories that are able to best explain observations and
outcomes.
We divided articles that lacked explicit theory into two different streams. First, we
classified some studies as literature based – that is, while an explicit theory was not used to
develop the theoretical relationship among variables, these papers are implicitly situated within a
major theory or group of theories such as economics or psychology. These papers generally rely
on prior literature to introduce new variables to a pre-established area of budgeting research. We
identified the implicit theory by examining the types of articles being referenced in the literature
review and hypothesis development sections, as well as the reference list for any relevant theory
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references to ensure appropriate classification. If there was little discussion of prior literature, we
did not classify it as literature based 1.
Second, we observe several budgeting papers that do not rely on an implicit or explicit
theory to form their research questions, predictions, and/or expectations. Such papers often draw
upon practice-based observations such as observed cultural, policy, and/or organizational
changes to formulate parameters for the research study. We further analyze the no theory studies
based on major methodologies applied to accounting research to provide additional insights.
Survey methodology
Thirty seven papers do not specify a major theory and use survey methods to conduct the
research. Many papers that use survey methods rely on extant literature to develop the research
questions, predictions and/or expectations (13 papers or 35%). These papers tend to build upon
prior literature to examine variations or to consider discrepancies in findings relative to extant
research. One example begins with a paper written by Brownell and published in The Accounting
Review in 1981 on locus of control. Nine subsequent papers (Brownell, 1982; Brownell and
Hirst, 1986; Dunk, 1989; Imoisili, 1989; Brownell and Merchant, 1990; Brownell and Dunk,
1991; Lau et al., 1995; Lau and Tan, 1998; and Otley and Pollanen, 2000) build upon Brownell
(1981) as a foundation for further research. In another example, Nouri (1994) builds on prior
literature to examine the role of organizational commitment and involvement in the budget
process on budget slack. While these papers are situated within a prior theoretical paradigm,
they do not rely upon an explicit theoretical framework.
Still, several papers by design forego use of a specific explicit or implicit theory and are
exploratory in nature (e.g., Hopwood, 1974; Williams et al., 1985; Ekholm and Wallin, 2000;
1
While this was somewhat subjective, the authors reviewed the papers twice to see if we agreed on classifying
papers as literature based. Disagreements were discussed and consensus obtained for the classifications.
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Rausch and Wall, 2015; Pendlebury and Jones, 1985; Hansen and Van der Stede, 2004; Libby
and Lindsay, 2010 and Kenis, 1979). Pendelbury and Jones (1985) examine the widening
disparity between practice and ‘the literature’. Obviously, survey methodology works well to
study this type of research question. Some of these papers have more theoretical foundations
than others but none use specific, stated theories to test hypotheses.
Johansson and Siverbo (2014) use a unique approach that combines survey and archival
data from the public sector for knowledge creation though their hypotheses are developed based
on prior literature. There are other studies where a survey is developed based on prior field
studies (Shields and Young, 1994).
Some survey papers that do not use an explicit theory propose a theoretical model to be
tested. For example, Parker and Kyj (2006) develop a framework implicitly derived from agency
theory and organizational theory literature to develop hypotheses and then test the new expanded
theoretical framework through the survey instrument. They do not explicitly state the use of
agency or organizational theory in their hypotheses but it is from these sets of literature that their
new frameworks are developed.
Archival, analytical and experimental
There were 18 articles that we identified as having no explicit theory within the
methodologies of archival, experimental, analytical and other. The variables introduced examine
variations to characteristics of the user or agent (e.g., locus of control, Machiavellianism), the
context (multi period vs single shot), or budget characteristics (participative vs non-participative,
tight vs loose). For example, Fisher, Fredrickson and Pfeffer (2002) use a literature-based
approach to examine the effects of a single period versus multi-period setting within participative
budgeting. Previously, only a single shot setting had been studied in relation to negotiated budget
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settings. In their study, Fisher et al. (2002) do not rely on an explicit theory but cite literature
from economics, psychology and prior budgeting research in accounting to introduce a multi-
period setting to a negotiated budget setting.
A second stream of literature relies on neither an implicit nor explicit theory. These
papers adopt a non-positivist perspective, for example Berland and Chiapello (2009) take on a
critical perspective using a sociological perspective. In another example, Robson (2008) provides
a historical overview of the provision of accounting information in UK hospitals, while Noguchi
and Boyns (2012) also adopt a historical perspective to examine budgeting in Japan during an
interwar period.
Alternatively, these paper stem from observations from practice to explore policy
changes, or misspecified theoretical assumptions such as those based on profit models applied to
not-for-profit settings. In these articles, data is used to further illustrate the observations made.
For example, Todd and Ramanathan (1994) uses an archival approach to examine data collected
from the New York City Police Department (NYPD). This study uses data on felony and
misdemeanor and operating budgets to consider how budget responsiveness to changes in
demand for services (complaints). The authors also investigate whether crime rates are
associated with police activity to examine the outcomes of budgetary allocations in a not for
profit setting. Agyemang and Broadbent (2015) examine how the introduction of new policy
affected budgeting practices in UK universities.
Field studies
There were 30 papers identified as having no explicit theory using a field study
methodology. Of those, 20 adopt a literature-based “theory”. These papers build on prior
findings and prior definitions to form the foundation for their research studies. Using previously
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studied variables, these researchers aimed to continue work done by others, adding context,
environment or actors to the equation examined.
Of the three studies in the health care sector, two significantly highlighted the role of
power in budgeting, in the manager’s ability to use the budget to their advantage (Covaleski and
Dirsmith, 1986; Carlstrom, 2012). A miscommunication and accountability in Covaleski and
Dirsmith (1986) became important to the organization while managers changed strategies in
Carlstrom (2012) to keep in line with organization policies. The third, Jacobs (1998) followed
general practitioners and the introduction of cost and budget reports, showing that it was a
positive environment, with power being garnered by those highlighting the costs of medical tests.
The threads of strategy in using budgets within the organizations also prevails throughout
these articles, Irvine (2005) investigates the strategy used to raise money to mobilise missions,
while Gordon (1984) uses strategy to minimize the problem that information required will
exceed information capacity. Christiansen (1997) describes the budget games and strategic
outcomes in a Danish Theatre, demonstrating how management dealt with demands of internal
and external actors. There are also threads of politics throughout these articles, in their context
(Peters, 2001), actors (Covaleski and Dirsmith, 1986; Llewellyn,1998) and the accountability
relationship with constituents (Ahrens, 2015).
There are 11 articles of field study methodology with no major theory that also do not use
literature to inform the rationale of their research. Though a few have an underlying theme of
theory to them, no theory is explicitly referenced or used throughout the literature reviews,
analysis, and discussion. Bunce et al (1995) is the only theory building paper using a field study,
they investigate management systems and dependent budgeting, finding that traditional
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budgeting is dysfunctional and requires business process orientation and initiatives in an ongoing
system.
In the health care sector Pinch (1989) through a non-traditional write-up examines
clinical budgeting in the UK; while Mayston (1998) goes beyond just health care into the
resource allocation and devolved budgeting of disadvantaged groups, finding that equity is
important. Jacob’s (1995) demonstrated that specific managers play an important role in
moderating the resistance to new budgets and accounting change. Arwidi (1993) and
Czarniawska-Joerges (1989) both examine budgeting in Sweden, the public sector, the history of
it as well as the language or numbers and language of consensus. The health care and education
sectors are often the spotlight of research and the lack of theory does not stop researchers from
being interested in these sectors. Each field study provides a unique look at the real world of
accounting, a specific application of budgeting in an organization. While control is the dominate
use of budgeting throughout these articles, planning is the second most important factor in the
role of budgeting in these research studies.
OPPORTUNITIES FOR FUTURE RESEARCH
Early calls were for research that spans levels of analysis as “budgeting behavior and
outcomes are likely to interact with higher level characteristics” (Merchant, 1981). Although a
contingency theory approach examines how various characteristics of the organization and its
environment affect budgeting and its outcomes, surprisingly few studies answered the calls to
examine budgeting across units of analysis. Recent developments in psychological theory and
methodological approaches offers fruitful opportunities to expand upon research that examines
how higher level characteristics combine with lower levels of analysis to affect and be affected
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by budgeting and its related variables. This is true across many of the papers we included in our
study.
Within budgeting research that relies upon psychology theory, data analysis is typically
limited to t-tests and ANOVA procedures. To some extent, structural equation modeling is being
applied to consider relationships beyond independent variable interactions and moderation (e.g.,
Venkatesh and Blaskovich 2012; Chong and Chong 2002). Additionally, budgeting research in
psychology assumes only one random factor. Scenarios of multiple random factors may prove
fruitful for future budgeting research. We suggest researchers may use generalized linear mixed
models as specified by Judd, Westfall and Kenny 2017 to advance the study and examination of
budgeting research.
Theory development
Malmi and Granlund (2009) lament the fact that theories in accounting are rarely
recognized as ‘real’ theories by accounting researchers. They also discuss theories that do not
have theory status. Based on our extensive review of the budgeting literature, we consider the
theory development process by documenting the progression of theories used in our sample.
Malmi and Granlund conclude by commenting that there are number of normative theories, “not
regarded as theories by the academic community, [but that] these theories aim to give guidance
to practice, [unfortunately they] seldom address the potential shortcomings and inherent
limitations. (p. 615).
Some of the studies do not identify specific theories but are based on prior literature.
This may be the first step in the development of an identified or independent theory. Some
papers identify a model previously developed or design a model that is to be tested as part of the
literature review process. A model and its development may be the next step in theory
22

development (Llewelyn, 2003). Some papers then define a framework (such as Simons’
framework, Abernethy and Brownell, 1999; Christiansen, 1997; Frow et al., 2010; Sponem and
Lambert, 2016) and use this as their theoretical foundation. “Conceptual framing can offer a
greater understanding of the empirical issues under discussion. [While] appropriate theorization
can give fuller explanations of organizational structures and processes than those held by
organization members” (Llewelyn, 2003, 662). Other papers may use part(s) of a theory to
position their research (Ezzamel and Robson, 1999; Uddin and Tsamenyi, 2005; Tooley and
Guthrie, 2007; Macintosh, 2009). If only parts of an identified theory apply to the study, this
may be part of new theory development whether identified as such or not. Contribution to the
literature is often the reason that research is conducted but just as often, it is to contribute to
theory. Finally, most papers identify an explicit theory such as agency, etc. to set up the research
and to discuss findings. These levels of theory development may provide some insights into why
theories seem to be lacking in some papers and clearly observed in others. “What needs to be
distinguished is theories about management accounting versus theories of management
accounting” (Malmi and Granlund, 2009).
CONCLUSION
Cleary, there are a variety of theories used throughout the budgeting literature and, as it
stands, there is not a cohesive theory of budgeting; researchers use theories from all thought
processes, basic backgrounds and fields of science. As there is no “accounting” theory, this is not
surprising, but what we attempt to do here is show how important a unified thought process
could be behind budgeting in organizations.
Managers and researchers have departed significantly from the original concept of
budgeting – providing a basis to allocate spending to one activity over another (Key, 1940).
23

With this departure, it is not surprising that researchers use a variety of theories to explain the
role of budgeting within an organization. Researchers have found that budgeting is used for a
number of purposes including planning, controlling behaviors, motivating managers and
measuring success (or failure). Examining the causal form of a model may provide insights into
how budgeting affects behaviors. Therefore, we encourage the further development of theories
that help explain the many uses of budgeting.
24

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healthcare businesses. Management Accounting Research, 21 (1): 40-55.
32

Kirby, A.J., S. Reichelstein, P.K. Sen and T. Paik. 1991. Participation, slack, and budget-based
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33

Licata, M.P., R.H. Strawser and R.B. Welker. 1986. A Note on participation in budgeting and
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Merchant, K.A. 1985. Budgeting and the propensity to create budgetary slack. Accounting,
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34

Mock, T.J. 1973. The value of budget information. The Accounting Review, 48 (3): 520-534.
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Nikias, A.D., S.T. Schwartz, E.E. Spires, J.R. Wollscheid and R.A. Young. 2010. The effects of
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Nouri, H. 1994. Using organizational commitment and job involvement to predict budgetary
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Nouri, H. and L. Kyj. 2008. "The effect of performance feedback on prior budgetary
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Nouri, H. and R.J. Parker. 1996. The effect of organizational commitment on the relation
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Nouri, H. and R.J. Parker. 1998. The relationship between budget participation and job
performance: The roles of budget adequacy and organizational commitment. Accounting,
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Review, 48 (3): 535-548.
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Otley, D. and R.M. Pollanen. 2000. Budgetary criteria in performance evaluation: A critical
appraisal using new evidence. Accounting, Organizations and Society, 25 (4): 483-496.
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Parker, L.D. 2002. Budgetary incrementalism in a Christian bureaucracy. Management
Parker, R.J. and L. Kyj. 2006. Vertical information sharing in the budgeting process. Accounting,
Pendlebury, M. and R. Jones. 1985. "Governmental budgeting as ex ante financial accounting:
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Peters, K. 2001. When reform comes into play: Budgeting as negotiations between
administrations. Accounting, Organizations and Society, 26(6): 521-539.
35

Pettersen, I.J. 2001. "Implementing management accounting reforms in the public sector: The
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Pinch, T., M. Mulkay and M. Ashmore. 1989. Clinical budgeting: Experimentation in the social
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Polesie, T. 1981. Action and reaction: Decisive factors in developing accounting practice.
Poon, M., R. Pike and D. Tjosvold. 2001. Budget participation, goal interdependence and
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Preston, A.M., D.J. Cooper and R.W. Coombs. 1992. Fabricating budgets: A study of the
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Rajan, M.V. 1992. Cost allocation in multiagent settings. The Accounting Review, 67 (3): 527-
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Rankin, F.W., S.T. Schwartz and R.A. Young. 2008. The effect of honesty and superior authority
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Robson, N. 2008. Costing, funding and budgetary control in UK hospitals. Journal of Accounting
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Rockness, H. and M.D. Shields. 1988. "An empirical analysis of the expenditure budget in
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36

Searfoss, D.G. 1976. Some behavioral aspects of budgeting for control: An empirical study.
Seiler, R.E. and R.W. Bartlett. 1982. Personality variables as predictors of budget system
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Sharma, D.S. 2002. The differential effect of environment dimensionality, size and structure on
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Shields, M.D. and S.M. Young. 1993. Antecedents and consequences of participative budgeting:
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196.
Simons, R. 1989. "Analysis of the organizational characteristics related to tight budget goals."
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Stevens, D.E. 2002. "The Effects of Reputation and Ethics on Budgetary Slack." Journal of
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Tiller, M.G. 1983. The dissonance model of participative budgeting: An empirical exploration.
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37

Upton, D.R. 2009. Implications of social value orientation and budget levels on group
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organization. Journal of Accounting Research, 301-319.
38

TABLE 1
Articles researching budgeting issues

Total articles identified as budgeting research 651
Articles outside scope of study 355 2
Articles that did not meet inclusion criteria 104 3
Articles included in analysis 251
2
A research assistant compiled the initial list of articles. The authors reviewed the list and determined which papers
were discussing research of budgeting issues.
3
Consisted of literature review articles, discussion articles, etc. on budgeting research
39

TABLE 2
Journals and Relevant Articles Classified in This Study (by year)
Pre- 1980- 1985- 1990- 1995- 2000- 2005- 2010- 2015-

1980 84 89 94 99 04 09 14 16 Total
Accounting, Auditing & Accountability Journal 2 4 4 4 5 3 22
Accounting Organizations and Society 2 9 14 8 7 6 6 7 1 60
Behavioral Research in Accounting 1 4 3 2 4 14
Contemporary Accounting Research 2 1 1 1 1 6
Critical Perspectives on Accounting 2 1 1 5 2 11
European Accounting Review 2 3 4 9
Journal of Applied Accounting Research 1 2 3
Journal of Accounting and Economics 1 1
Journal of Accounting and Organizational 3 4 1 8
Change
Journal of Accounting and Public Policy 1 4 2 2 1 10
Journal of Accounting Research 4 4 3 3 1 1 15
Journal of Management Accounting Research 6 2 3 7 3 21
Management Accounting Research 2 11 7 1 6 3 30
Qualitative Research in Accounting and 2 2
Management
Review of Accounting Studies 1 1
The Accounting Review 9 3 9 8 1 2 3 1 2 38
Total 14 17 32 33 33 33 33 42 14 251
40

TABLE 3
Summary of Classification of Articles by Major Theory and Primary Research Methodology
Panel A - Economics
Methodology Paper
Archival Blanchard, G.A., C.W. Chow and E. Noreen, 1986
Cassar, G. and B. Gibson, 2008 4
Giroux, G. and D. Shields, 1993
Leone, A. and S. Rock, 2002
Mayper, A.G., M. Granof and G. Giroux, 1991
Mensah, Y.M. and R. Werner, 2003
Zimmerman, J.L., 1976
Field/Case Study Chwastiak, M., 2001
Davila, A. and G. Foster, 2005
Ostergren, K. and I, Stensaker, 2011
Otley, D.T., 1978
Reichelstein, S., 1992
Walker, K.B. and E.N. Johnson, 1999
Analytical Baber, W.R., 1985
Balakrishnan, R., 1992
Chen, Q., 2003
Demski, J.S. and G.A. Feltham, 1978
Hagigi, M., B.D. Kluger, and D. Shields, 1990
Heinle, M.S., N. Ross and R.E. Saouma, 2014
Kirby, A.J., S. Reichelstein, P.K. Sen and T. Paik, 1991
Magee, R.P. 1980
Mookherjee, D. and S. Reichelstein, 1997
Narayanan, V.G.G., 1995
Penno, M., 1990
Rajan, M.V., 1992
Schroeder, D.A., 1992
Schwartz, S.T, A. Sudbury and R.A. Young, 2014
Zimmerman, J.L., 1976
Experimental Arnold, M.C. and R,M. Gillenkirch, 2015
Arnold, M.C., E. Ponick and H. Schenk-Mathes, 2008
Chow, C.W., J.C. Cooper and W.S. Waller, 1988
Douthit, J.D., and D.E. Stevens, 2015
Fisher, J.G., S.A. Peffer, and G.B. Sprinkle, 2003
Fisher, J.G., L.A. Maines, S.A. Peffer, and G.B. Sprinkle, 2002
Gordon, L.A. and F.E., Sellers, 1984
Hannan, R.L., R.W. Rankin, and K.L. Towry, 2010
Hobson, J.L., M.J. Mellon and D.E. Stevens, 2011
4
Papers in italics are listed under more than one methodology.
41

Kachelmeier, S.J., J.R. Smith and W.F. Yancey, 1994
Kim, D.C., 1992
Kren, L., 1990
Mock, T.J., 1973
Nikias, A.D., S.T. Schwartz, E.E. Spires, J.R. Wollscheid and R.A.
Young, 2010
Rankin, F,W., S.T. Schwartz and R.A. Young, 2008
Reed, S.A., 1986
Rockness, H.O., 1977
Schatzberg, J.W. and D.E. Stevens, 2008
Schwartz, S.T., E.E. Spires, D.E. Wallin and R.A. Young, 2012
Webb, R.A., 2002
Young, S.M., 1985
Survey Aranya, N., 1990
Brown, J.L., J.H. Evans and D.V. Moser, 2009
Brownell, P. and M. McInnes, 1986
Cassar, G. and B. Gibson, 2008
Dunk, A.S., 1990
Eldenburg, L. and N. Soderstrom, 1996
Nouri, H. and R.J. Parker, 1996
Onsi, M., 1973
Shields, M.D., and S.M. Young, 1993
Other Onsi, M., 1973
Total number of papers – 56
Panel B – Psychology
Methodology Paper
Archival (none)
Field/case study Davila, T. and M. Wouters, 2005
Elmassri, M. and E. Harries, 2011
Friis, I. and A. Hansen, 2015
Kihn, L.A., 2011
Lapsley, I., A. Midwinter, T. Nambiar and I. Steccolini, 2011
Lukka, K., 1988
Marginson, D. and S. Ogden, 2005
Marginson, D. and B. Bui, 2009
Merchant, K.A. and J. Manzoni, 1989
Analytical Venkatesh, R. and J. Blaskovich, 2012
Experimental Abul-Ezz, M., and J.W. Dickhaut, 1993
Arnold, M.C., 2015
Church, B.K., R.L., Hannan and X. Kuang, 2012
Daroca, R.P., 1984
Davis, S., F.T. DeZoort and L.S. Kopp, 2006
Fisher, J.G., J.R. Frederickson and S.A. Peffer, 2002
Guymon, R.N., R. Balakrishnan and R.M. Tubbs, 2008
Hirst, M.K. and P.W. Yetton, 1999
42

Kida, R.E., K.K. Moreno and J.F. Smith, 2001
Libby, T., 1999
Libby, T., 2001
Licata, M.P., R.H. Strawser and R.B. Welker, 1986
Lindquist, T.M., 1995
Nouri, H., and L. Kyj, 2008
Sprinkle, G.B, M.G. Williamson and D.R. Upton, 2002
D.E. Stevens, 1983
M.G. Tiller, 1983
Upton, D.R., 2009
Survey Brownell, P., 1982
Brownell, P., 1983 (a)
Brownell, P., 1983 (b)
Chenhall, R.H., 1986
Chong, V.K. and K.M. Chong, 2002
Choo, F. and K.B. Tan, 1997
Collins, F., 1978
Collins, F., P. Munter and D.W. Finn, 1987
Comerford, S.E. and M.A. Abernethy, 1999
Frucot, V., and W.T. Shearon, 1991
Lau, C.M and S.L.C. Tan, 2006
Macintosh, N.B. and J.J. Williams, 1992
Magner, N., R.B. Welker and T.L. Campbell, 1995
Marginson, D. and S. Ogden,2005
Marginson, D. and B. Bui, 2009
Merchant, K.A., 1981
Mia, L. 1988
Mia, L. 1989
Poon, M., R. Pike and D. Tjosvold, 2001
Simons, R., 1989
Subramanian, N. and L. Mia, 2001
Subramanian, N. and L. Mia, 2003
Venkatesh, R. and J. Blaskovich, 2012
Wentzel, K., 2002
Wong-on-wing, B., L. Guo and G. Lui, 2010
Other Derfuss, K., 2009
Hirst, M.K., 1987
Poon, M., R. Pike and D. Tjosvold, 2001
Panel C - Sociology
Methodology Paper
Archival Balakrishnan, R., N.S. Soderstrom and T.D. West, 2007
Fowler, C., 2009
Kobelsky, K.W., V.J. Richardson, R.E. Smith and R.W. Zmud, 2008
Lee, T.M. and E. Plummer, 2007
43

Field/case study Alam, M., 1997
Amans, P., A. Mazars-Chapel and F. Villesèque-Dubus, 2015
Becker, S.D., 2014
Becker, S.D., T. Jagalla and P. Shaerbaek, 2014
Boitier, M. and A. Riviere, 2013
Brownell, P. 1985
Bruns, Jr., W.J. and J.H. Waterhouse, 1975
Covaleski, M.A. and M.W. Dirsmith, 1988
Covaleski, M.A., M.W. Dirsmith, and S.F. Jablonsky, 1985
De Waal, A., M. Hermkens-Janssen, and A.V. de Ven, 2011
Edwards, P., M. Ezzamel, and K. Robson, 1999
Edwards, P., M. Ezzamel, and K. Robson, 2005
Edwards, P., M. Ezzamel, K. Robson and M. Taylor, 1996
Ezzamel, M., K. Robson and P. Stapleton, 2012
Ezzamel, M., N. Hyndman, A. Johnsen, I. Lapsley and J. Pallot, 2007
Fowler, C., 2009
Frow, N., D. Marginson and S. Ogden, 2010
Gooneratne, T.N. and Z. Hoque, 2016
Henttu-Aho, T. and J. Järvinen, 2013
Hyvonen, T. and J. Järvinen, 2006
Kuruppu, C., p. Adhikari, V. Gunarathna, P. Perera and C. Karunarathna,
2016
Marginson, D.E., 1999
Mutiganda, J.C., 2013
Pettersen, I.J., 2001
Rautiainen, A., 2010
TerBogt, H.J. and G.J. VanHelden, 2011
Tooley, S. and J. Guthrie, 2007
Uddin, S., B. Gumb, and S. Kasumba, 2011
Analytical (none)
Experimental (none)
Survey Abernethy, M.A. and J.U. Stoelwinder, 1991
Abernethy, M.A., and P. Brownell, 1999
Alam, M., 1997
Armstrong, P., P. Marginson, P. Edwards and J. Purcell, 1996
Brownell, P. 1985
Bruns, Jr., W.J. and J.H. Waterhouse, 1975
Collins, F., O. Holzmann and R. Mendoza, 1997
De Baerdemaeker, J. and W. Bruggeman, 2015
Giroux, G.A., A.G. Mayper and R.L. Daft, 1986
King, R., P.M. Clarkson and S. Wallace, 2010
Kren, L., 1992
Leach-Lopez, M.A., W.W. Stammerjohan and F.M. McNair, 2007
Merchant, K.A., 1981 5
5
Papers in bold are listed in more than one major theory.
44

Rockness, H. and M.D. Shields, 1988
Van der Stede, W.A., 2000
Williams, J.J., N.B. Macintosh and J.C. Moore, 1990
Other Boland, R.J., L.R. Pondy and S.F. Jablonsky, 1986
Fowler, C., 2009
TerBogt, H.J. and G.J. VanHelden, 2011
Townley, B., 1996
Uddin, S. and M. Tsamenyi, 2005
Panel D – Other
Methodology Paper
Archival (none)
Field/case study Bryer, A.R., 2014
Covaleski, M.A. and M.W. Dirsmith, 1983
Ezzamel, M., N. Hyndman, A. Johnsen and I. Lapsley, 2014
Goddard, A., 2004
Joensson, S., 1982
Lapsley, I. and A. Rios, 2015
L.D. Parker, 2002
Preston, A.M., D.J. Cooper and R.W. Coombs, 1992
Analytical (none)
Experimental (none)
Survey Lau, C.M., L.C. Low and I.R.C. Eggleton, 1997
Other Hyndman, N., M, Liguori, R.E. Jeyer, T. Polzer and S. Rota, 2014
Panel E – No theory
Methodology Papers
Archival Chaney, B.A., P.A. Copley and M.S. Stone, 2002
Ernst, C. and A. Szczesny, 2008
Gordon, L.A., M.M. Kleiner and R. Natarajan, 1986
Johansson, T. and S. Siverbo, 2014
T. Todd and K.V. Ramanathan, 1994
Field/case study Ahrens, T. and L. Ferry, 2015
P. Armstrong, 2011
Arwidi, O. and L.A. Samuelson, 1993
P. Bunce, R. Fraser and L. Woodcock, 1995
E. Carlstrom, 2012
J.K. Christiansen and P. Skaerbaek, 1997
I. Clark, 2001
P.M. Collier and A.J. Berry, 2002
Covaleski, M.A., and M.W. Dirsmith, 1986
Czarniawaska-Joerges, B. and B. Jacobsson, 1989
Dunk, A.S. and H. Perera, 1997
45

Edwards, J.R., T. Boyns and M. Matthews, 2002
Endenich, C., 2014
Fauré, B. and L. Rouleau, 2011
Fernandez-Revuelta Perez, L. and K. Robson, 1999
Flamholtz, E.G. and S. Kerr, 1983
Gordon, L.A., S. Haka and A.G. Schrick
Hauriasi, A. K. Van-Peursem and H. Davey, 2016
Hopwood, A.G., 1974
Irvine, H., 2005
Jacobs, K., 1995
Jacobs, K., 1998
Llewellyn, S., 1998
Mayston, D.J., 1998
Moll, J. and Z. Hoque, 2011
K. Peters, 2001
T. Pinch, M. Mulkay and M. Ashmore, 1989
Polesie, T., 1981
Sandalgaard, N. and P. Nikolaj Bukh, 2014
Sponem, S. and C. Lambert, 2016
L. Zan and Q. Xue, 2011
Analytical Hansen, S.C., 2011
Kanodia, C., 1993
Experimental Brownell, P., 1981
Hartmann, F.G.H. and V.S. Maas, 2010
Survey Brownell, P., 1982
Brownell, P. and M. Hirst, 1986
Brownell, P. and K.A. Merchant, 1990
Brownell, P. and A.S. Dunk, 1991
Chong, K.M. and H. Mahama, 2014
Clinton, B.D. and J.E. Hunton, 2001
Dunk, A.S., 1989
Dunk, A.S., 1992
Dunk, A.S., 1993
Ekholm, B. and J. Wallin, 2000
Ezzamel, M., 1990
Hansen, S.C. and W.A. Van der Stede, 2004
Hirst, M.K. and S.M. Lowy, 1990
Hopwood, A.G., 1974
Imoisili, O.A., 1989
Johansson, T. and S. Siverbo, 2014
Kenis, I., 1995
Lau, C.M., L.C. Low and I.R.C. Eggleton, 1995
Lau, C.M. and J.J. Tan, 1998
Libby, T. and R.M. Lindsay, 2010
46

Merchant, K.M., 1984
Merchant, K.M., 1985
Milani, K., 1975
Nouri, H., 1994
Nouri, H. and R.J. Parker, 1998
Otley, D. and R.M. Pollanen, 2000
Parker, R.J. and l. Kyj, 2006
Pendlebury, M. and R. Jones, 1985
Rausch, A. and F. Wall, 2015
Ross, A., 1995
Searfoss, D.G., 1976
Seiler, R.E. and R.W. Bartlett, 1982
Sharma, D.S., 2002
Shields, M.D. and S.M. Young, 1994
Williams, J.J. and C.R. HInings, 1988
Williams, J.J., J.D. Newton and E.A. Morgan, 1985
Other Agyemang, G. and J. Broadbent, 2015
Ansari, S.L., 1979
Berland, N. and E. Ciapello, 2009
Leen, S.S. and D.G. Woodward, 2005
Lin, W.T., 1978
Noguchi, M. and T. Boyns, 2012
Robson, N., 2008
47

TABLE 4
Panel A: Economic Major Theory summary of other explicit theories discussed
Explicit theory discussed Frequency

No other major explicit theory identified 14 Frequency
Agency theory 30 Decision theory 1
Contingency theory 1
Cognitive psychology 1
Social norm theory 1
Bayes theory 1
Expectancy theory 6 Utility theory 1
Game theory 2
Prospect theory 1
Utility 2
Total 56
48

Panel B: Psychology Major Theory summary of other explicit theories discussed

No other major theory identified 5
Aspiration theory 1 Frequency
Attribution theory 3 Contingency theory 1
Obedience theory 1
Budgetary biasing theory 1
Cognitive dissonance 1 Sociology 1
Cognitive psychology 1
Consistency theory 1
Constraint theory 1
Decision-making theory 1 Frequency
Distributive justice 2 Procedural theory 1 Referent cognition theory 1
Goal-setting theory 1 Procedural justice 1
Goal interdependence theory 1
Goal-setting theory 5 Economic theory 1
Procedural justice 1
Holistic individual image framework 1
Impression management theory 1
Informational influence theory 1 Social comparison theory 1
Interdependence theory 1
Locus of control 2
Mintzberg’s theory 1
Moral disengagement theory 1
Organizational commitment theory 1
Procedural justice 3
Reference cognitions theory 2
Role theory 3
Self-determination theory 1
Socialization theory 1
49

Theory of power 1 Negotiated order 1
Total 52
Panel C: Sociology Major Theory summary of other explicit theories used

No other major theory discussed -
Actor network theory 1
Bourdieu 1 Frequency Frequency
Contingency theory 14 Agency theory 1 Institutional theory 1
Institutional theory 1
Organizational theory 2
Organizational behavior 1
Cultural dimensions theory 1
Evolutionary adoption framework 1
Foucault 1
Institutional theory 14 Contingency theory 1 Economics 1
Institutional economics 1
Critical realism 1
Latour – translation 1
Median voter model 1 Leviathan model 1
Neo-institutional theory 4
Simons framework 2
Structuration theory 1
Total 49
50

Panel D: Other Major theory summary of explicit theories used

Critical anthropology 1
Diffusion theory 1
Framework of culture 1
Grounded theory 4
New public management 1
Science and technology studies 1
Situationist theory 1
Transparency theory 1
Total 11
Panel E: No Major theory summary of IMPLICIT theories used
Literature based (Yes/No) Frequency Implicit theory discussed Frequency

Literature based 36 No implicit theory 10
Agency theory 2
Brunsson’s 1
Delegation of responsibilities 1
Hypothesis based 1
Legitimacy 1
Meta-perspectual control systems 1
Motivation theory 1
Organizational change 2
Organizational communications 1
Political perspectives of business 1
Praxeological approach 1
Psychology 4
Simons 2
51

Social constructionist 1
Trust literature 1
Sub-total 36
Not identified as literature based 48 No implicit theory 26
Behavioral 1
Economics 5
Ethnic-identity management 1
Goal-setting theory 1
Governmentality 1
Institutional theory 1
New institutional sociology 1
Psychology 2
Simons framework 1
Social psychology 1
Sociology 1
Sub-total 48
Total 84
52

TABLE 5
Summary of Classification of Articles by Major Theory and Level of Analysis
Level of Analysis
Major theory Individual Subunit Organization Beyond Total
organization
Economics 47 1 10 2 56*
Psychology 45 2 5 1 52^
Sociology 9 6 39 2 49#
Other 3 - 6 4 11`
No theory 36 10 42 4 84~
Total 139+ 19 101+ 13 251
* Four papers use multiple levels of analysis (individual and organization)
^ One paper uses multiple levels of analysis (individual and organization)
# Seven papers use multiple levels of analysis (four individual and organization; one individual and beyond organization; one
individual, subunit and organization; one subunit and organization)
` Two papers use multiple levels of analysis (individual and organization)
~ Eight papers use multiple levels of analysis (one individual and beyond organization; three individual and organization; one
individual, subunit and organization; two individual and subunit)
+ Two paper uses multiple major theories with Individual as the Level of Analysis (Economics and Psychology; Psychology and
Sociology); one of these papers also uses Organization for its Level of Analysis
53

TABLE 6
Summary of Classification of Articles by Major Theory and Causal-Model Form
Causal-model form
Major Independent Moderator Cyclical Reciprocal Not
Additive Intervening
theory interaction interaction recursive nonrecursive applicable Total
Economics 18 3 15 14 1 2 6 56*
Psychology 4 9 14 19 - 1 7 52^
Sociology 7 5 3 6 1 1 28 49#
Other 1 10 11
No theory 15 6 17 13 - 1 32 84
Total 44 22 50 52 2 5 83 251
* Three papers have variables that fit into multiple categories (additive and moderator interaction; additive and independent
interaction; independent interaction and moderator)
^ Two papers have variables that fit into multiple categories (intervening and moderator interaction; independent interaction and
moderator interaction)
# Two papers have variables that fit into multiple categories (additive and moderator interaction; additive and independent interaction)
54

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In search of a theory of budgeting: A literature review

Electronic copy available at: https://ssrn.com/abstract=3104315

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public corporations, higher education, healthcare, government and non-government

the discussion of the benefits and drawbacks of budgeting.

defined by CELS, we provide a comprehensive review of the theoretical underpinnings of

budgeting research by examining articles in 16 accounting journals spanning publication from

of analysis, use of budgeting and, where applicable, causal model form.

Furthermore, research grounded in theory often allows us to examine intricate issues

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by helping to explain outcomes.

theoretical perspectives. By providing this comprehensive analysis of budgeting theories, we

principles of explanation and predictions, grounded in theory.

opportunities and the final section summarizes our findings.

Method and design

We begin with CELS (2003) as a framework to classify budgeting research according to

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budget (or some form of budget*) would be included in our review.

[Insert Table 1 here]

articles classified by target journal and year of publication.

[Insert Table 2 here]

DISCUSSION AND ANALYSIS OF CLASSIFICATION SUMMARIES

paradigm as it applies to budgeting research.

[Insert Table 3 here]

Summary of articles with explicit theories mentioned

Economics based budgeting research with theory

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papers used multiple methodologies (see Table 3 Panel A for summary).

relationship using the metaphor of a ‘contract’” (Eisenhardt, 1989).

[Insert Table 4 here]

This employer/employee relationship is usually simplified to examining budgeting

we classified examined economic budgeting practices and their influence on individual

workings of the principal/agent model from a theoretical perspective (analytical methodology)

and from a practical perspective using the other research methodologies.

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As indicated by CELS (2003) the level of analysis from an economic theoretical

perspective is typically the agency relationship, focused on individuals. Of the 56 studies

one paper that uses an experimental methodology.

[Insert Table 5 here]

[Insert Table 6 here]

Psychology Based Budgeting Research (with theory):

A total of 51 articles were identified drawing upon psychology theory in budgeting

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Relatively fewer psychology-based budgeting studies apply an alternative methodology (e.g.,

literature. See Table 3 Panel B for a summary.

affected by and affect budgeting (e.g., Collins 1978).

Contingency theory of accounting emerged and became dominant in the 1970s,

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psychology based theories identified within budgeting research.

Given the humanistic foundations of psychology, it is unsurprising that the dominant

variables as both dependent and independent variables.

Theoretical developments within the field of socioecological psychology examines how

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Budget-based variables as the independent variable

Many studies examining budget-based variables as an independent variable, study their

characteristics of the organizational environment such as decentralization.

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characteristics affect budgeting and its outcomes.

Budget-based variables as the dependent variable

The majority of studies examine budget-based variables as the independent variable. Of

willingness to support or withhold support of the budget) as a budget-based outcome variable. To

characteristics as the dependent variable.

Causal model form