Article Abstract:
Simons' (1990) interactive/diagnostic typology of management control systems proved to be useful in assessing the role of budgeting in companies undergoing strategic change. An analysis of data taken from 63 hospitals shows the validity of Simon's prediction on budgeting, which states the positive effect of interactively utilizing budgeting during strategic redirection on performance. It shows consistency with Simon's description of the manner in which control systems are applied to address strategic uncertainties. The data also validates Simon's claim regarding the influence of effective application of strategic priorities on the way accounting controls are utilized. The use of budgeting by upper management was proven effective in terms of satisfying the learning and adaptation needed when strategic change is going on.
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Article Abstract:
The processeses involved in the development of accounting and budget systems were examined. The data used in the study were obtained from the UK's National Health Service where a new budgeting system has just been introduced. Results of the study contradict the assumption that accounting systems are fixed and well-defined technologies that are developed and introduced to the organization. Instead, findings indicate that accounting and budgeting systems are fabricated in a variable fashion. Management budget systems start out with ambiguous characteristics, objectives and uses which become more specific as go through the design and implementation stages.
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Article Abstract:
Richard Boland's and Louis Pondy's observations on budget-cutting can increase one's understanding of the budgetary process, yet the study's objectives were not achieved. Differences between the genuine union model and Meyer's theory are never explained, the importance of the conclusion to combine the theories is not discussed, and the implications for further research are not addressed. The two decision-making theories seem only vaguely related, the analysis of the nature of accounting does not warrant the conceptual leaps of logic, and Simon's model of bounded rationality should not be dismissed, as it is useful.
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