Beyond Budgeting in Small and Medium-sized Enterprises: Review and Implications for Future Research

Guruge, Eshani
Narayan, Anil
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Master of Business
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Auckland University of Technology

Beyond Budgeting (BB) approach criticises traditional budgeting as costly and inappropriate for today’s dynamic and unpredictable environment (Lohan, 2010). The economic crisis in the year 2008 and the recent Covid-19 have forced the companies to utilise the principles of BB to act promptly without being tied up by traditional budgets (Falhem, 2020). However, empirical evidence on how BB is adopted and applied is widely lacking, and only a few large companies have practically implemented it. Small and Medium Enterprises (SME) have not yet been subjected by research on this specific topic. Therefore, the researcher aims to close the research gap by linking SME and the BB approach and practices.

The researcher has systematically reviewed the literature, examining the theories and extant evidence on SMEs’ use of management control systems and developing empirically testable propositions to state BB’s suitability for SME and encourage future research on this topic. As claimed by its proponents, the study finds that beyond budgeting is not suitable for small and medium-sized enterprises per se. Instead, it is proposed that these tend to utilise modified and partial forms of the approach upon context specifics.

The study’s findings denote that specific contextual factors of SME, governance issues, life cycle-effects, and sectorial influence affect beyond budgeting’s adoption. The paper developed two types of propositions. The first is proposed on the likelihood of BB adoption, whereas the second is propositions about the approach’s situation-specific performance potentials. Therefore, it is supposed to be a fruitful discussion basis for future scholarly activities in this young research field. The paper closes by providing further possibilities for research to encourage expanding theoretical and practical knowledge.

SME , BB , SLR , Future Research
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