Determinants and Effects of Diagnostic and Interactive Use of Budget in Iranian Companies
International Journal of Business and Economics Research
Volume 5, Issue 3, June 2016, Pages: 46-54
Received: Nov. 17, 2015;
Accepted: Dec. 16, 2015;
Published: May 11, 2016
Views 3225 Downloads 102
Farzane Jalali Ali Abadi, Department of Management, University of Tehran, Tehran, Iran
Alemeh Yazdanian, Department of Management, University of Tehran, Tehran, Iran
Elham Jamali, Department of Management, University of Tehran, Tehran, Iran
Regarding the vital role of budget as a major feature of management control systems (MACS) in various fields like formulation of strategy, development of dynamic capabilities, competitive advantage; and additionally, due to the low volume of empirical research in this area, this paper investigates the application of budget in different Iranian companies. For this purpose, we first considered the diagnostic and interactive approaches toward MACS which are introduced by Simon (1990). We also focused on the model of Hofmann, Wald & Gleich (2012) to develop our research model and hypothesis. Finally, based on Hofmann, et al. (2012) study, we consider variables that may inﬂuence budget use such as environmental, organizational and individual factors. Findings show that leadership behavior, user attitude, competitive intensity and interactive use are determinants in diagnostic use. Besides, factors such as market dynamism, centralization, culture of trust, user attitude and leadership behavior influence the level of interactive use of budgets. Further, our research shows that both kinds of budget usage influence formulation and implementation of the strategy and diagnostic use of budgets has a significant and positive impact on financial performance.
Farzane Jalali Ali Abadi,
Determinants and Effects of Diagnostic and Interactive Use of Budget in Iranian Companies, International Journal of Business and Economics Research.
Vol. 5, No. 3,
2016, pp. 46-54.
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/
) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Armesh, H., Salarzehi, H., Kord, B. (2010). Management Accounting System, Interdisciplinary Journal of Contemporary Research in Business, 2 (6), 193-206.
Chong, K. M., Mahama, H. (2013). The Impact of Interactive and Diagnostic Uses of Budgets on Team effectiveness, Management Accounting Research. 25 (3), 206-222.
Hofmann, S., Wald, A., Gleich, R. (2012). Determinants and Effects of the Diagnostic and Interactive Use of Control Systems: an Empirical Analysis on the Use of Budgets, Journal of Management Control, 23 (3), 153-182.
Simon, R., (1990). The Role of Management Control Systems in Creating Competitive Advantage: New Perspective, Accounting Organizations and Society, 5 (1/2), 127-143.
Theriou, N., D. Maditinos and. Z. Sevic. (2009).Management Control Systems and Strategy: A Resource based Perspective. Evidence from Greece, 7th International Conference on Accounting and Finance in transition - ICAFT, 23-25 July 2009, Greenwich University, London, UK.
Abernethy, M. A., Bouwens, J., & Van Lent, L. (2010). Leadership and control system design. Management Accounting Research, 21, 2–16.
Bisbe, J., & Malagueño, R. (2009). The choice of interactive control systems under different innovation management modes. European Accounting Review, 18, 371–405.
Mundy, J. (2010). Creating dynamic tensions through a balanced use of management control systems. Accounting, Organizations and Society, 35, 499–523.
Antonakis, J., Bendham, S., Jacquart, P., & Lalive, R. (2010). On making causal claims: a review and recommendations. The Leadership Quarterly, 21, 1086–1120.
Bhimani, A., & Langﬁeld-Smith, K. (2007). Structure, formality and the importance of ﬁnancial and non-ﬁnancial information in strategy development and implementation. Management Accounting Research, 18, 3–31.
Bisbe, J., & Otley, D. T. (2004). The effects of the interactive use of management control systems on product innovation. Accounting, Organizations and Society, 29, 709–737.
Cadez, S., & Guilding, C. (2008). An exploratory investigation of an integrated contingency model of strategic management accounting. Accounting, Organizations and Society, 33, 836–863.
Naranjo-Gil, D, & Hartmann, F. (2006). How top management teams use management accounting systems to implement strategy. Journal of Management Accounting Research, 18, 21–53.