Challenging the Principles of the Beyond Budgeting Model : Can you really go beyond?

This thesis examines whether the principles of the beyond budgeting model are entirely separated from any budgeting approach. Research has shown that managers express their concern that budgets are indispensible in their nature. However, the beyond budgeting advocates stress that improving existing budget approaches is not sufficient. Companies should rather abandon budgets and operate according to the beyond budget principles. This contrast between the views triggered the authors of this thesis to investigate whether the beyond budgeting model is a management control system that operates entirely free of any budgets. The investigation is finished with a case study on Svenska Handelsbanken, which is seen as the role model for beyond budgeting. It is investigated whether this particular corporation manages to operate free of budgets. The researchers have developed a conceptual framework, in order to compare the beyond budgeting principles with the most commonly used budgeting approaches. The investigation reveals that the principles are predominantly different from any budgeting approach. However, capital investments, resource allocation, and the control functions overlap partly with budgeting, even though the scope of the beyond budgeting model exceeds all the other approaches. The study further discloses that Svenska Handelsbanken allocates resources on the regional level in a very traditional budgeting way. Furthermore, staff and cash flow planning are also within the traditional budgeting approaches. Overall, the results suggest that the principles have to be updated to break free from budgeting and really go ‘beyond’. The so-called ‘better budgeting’ seems to be a hybrid between traditional and beyond budgeting. This hybrid cannot be replaced at this stage of the beyond budgeting model.