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1. Introduction
In many contemporary organizations, budgeting is considered to be an important instrument to implement companies’ strategies and to fulfil a wide range of further tasks (Hansen et al., 2003). Despite its widespread use, many business managers and practitioners have expressed their dissatisfaction with budgeting. It is often criticized for causing budget gaming and being quickly outdated, time-consuming, costly and inflexible (Hansen et al., 2003; Hope and Fraser, 1997; Libby and Lindsay, 2003a; Neely et al., 2003).
The most radical solution to overcoming these disadvantages is Hope and Fraser’s (2003a) “beyond budgeting” approach. The core element of this approach is abandoning performance contracts and all the fixed targets that go along with them (Hope et al., 2003). The concept has quickly attracted the attention of researchers, practitioners and managers. Some multinational companies such as Svenska Handelsbanken are reported as having abandoned budgets very successfully (Rickards, 2006).
Although beyond budgeting has enjoyed academia’s attention and is regarded one of the most advanced management accounting instruments, the method has not been widely adopted in practice (Abogun and Fagbemi, 2011; Libby and Lindsay, 2007; Lidia, 2014; Heupel and Schmitz, 2015). Libby and Lindsay (2010) point out that traditional budgeting still plays an important role in many companies and that most firms prefer to improve their budgeting processes rather than abandon them completely. One of the reasons that beyond budgeting is not (yet) widespread in business organizations may be that there is only a limited amount of academic studies as well as insufficient empirical evidence on the concept’s implementation in practice, which might help reducing the uncertainties associated with beyond budgeting (Hansen et al., 2003; Rickards, 2006). Therefore, current research does not provide adequate information on how to implement beyond budgeting and manage companies without budgets (Rickards, 2006). However, we argue that the available research on beyond budgeting has remained quite fragmented and unconnected and generally lacks a coherent research agenda. This problem might contribute to practitioners not being able to access research findings in a compressed manner. To help alleviate these problems, the purpose of this paper is to synthesize the available research findings on this topic and to identify potential problems of the beyond budgeting approach that might require further research.