Exploring the Impact of Organizational Context on Budgeting

Catherine Batt*, Pall Rikhardsson, Thorlakur Karlsson

*Corresponding author for this work

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Most organizations use budgeting and describe it as an institutionalized management accounting system, but it is also criticized for being unsuitable in today’s uncertain business environment. This paper explores how sudden changes in organizational context impact the importance of budgeting. Earlier studies have reported less importance given to budgeting following a crisis and a need for more interactive approaches. Our study is based on a survey of CFOs of the 300 largest companies in Iceland, according to the dataset Frjáls Verslun, following the financial crisis of 2008. A total of 191 (63.6%) responded to the survey. The results show widespread use of budgeting, regardless of the size of the organization. The results also show that uncertainty and organizational complexity do not impact the perceived importance of budgeting. Contrary to prior studies, this indicates that budgeting remains an important management tool during a sudden change in the organizational context.
Original languageEnglish
JournalCorporate Ownership and Control
Issue number4
Pages (from-to)134-151
Number of pages18
Publication statusPublished - 2021


  • Budgeting
  • Management control
  • Financial crisis
  • Uncertainty
  • Iceland

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