Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

An assessment of budgeting and budgetary controls among small and medium-sized enterprises: evidence from a developing economy

An assessment of budgeting and budgetary controls among small and medium-sized enterprises:... The capacity to plan, manage and control small and medium-sized enterprises (SMEs) is critical to realising their organisational goals. This paper assesses the effectiveness and perception of budgeting and budgetary control systems among SMEs.Design/methodology/approachRelying on the goal-setting theory (GST) and a methodology that accommodates questionnaires, data were collected from 170 manufacturing SMEs located in Cape Town, South Africa.FindingsResearch results affirm that the deployment of budgeting benefits from a positive perception of the value of budgeting and budgetary controls by key SME stakeholders. The study also finds that the perception of budgeting mirrors the level of education of SME operators, as educated respondents understand the value of implementing robust budgeting systems. Despite its focus on manufacturing SMEs, this study suggests that the manufacturing budget is the least utilised budgeting system among these organisations.Practical implicationsThe study reinforces the communication power of budgeting and budgetary controls as SMEs and economic agents are not only aware of corporate objectives but are equally incentivised to support the attainment of these objectives.Originality/valueDespite the extensive application of GST among scholars, its use in budgeting and budgetary control literature, particularly among SMEs in developing contexts, is limited. In line with GST, this study indicates that when agents establish and implement a plan, they are motivated to pursue and realise the set expectations while consistently evaluating themselves for improvement opportunities. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting in Emerging Economies Emerald Publishing

An assessment of budgeting and budgetary controls among small and medium-sized enterprises: evidence from a developing economy

Download PDF
26 pages

Loading next page...
 
/lp/emerald-publishing/an-assessment-of-budgeting-and-budgetary-controls-among-small-and-4iXTFJfram
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2042-1168
DOI
10.1108/jaee-04-2020-0082
Publisher site
See Article on Publisher Site

Abstract

The capacity to plan, manage and control small and medium-sized enterprises (SMEs) is critical to realising their organisational goals. This paper assesses the effectiveness and perception of budgeting and budgetary control systems among SMEs.Design/methodology/approachRelying on the goal-setting theory (GST) and a methodology that accommodates questionnaires, data were collected from 170 manufacturing SMEs located in Cape Town, South Africa.FindingsResearch results affirm that the deployment of budgeting benefits from a positive perception of the value of budgeting and budgetary controls by key SME stakeholders. The study also finds that the perception of budgeting mirrors the level of education of SME operators, as educated respondents understand the value of implementing robust budgeting systems. Despite its focus on manufacturing SMEs, this study suggests that the manufacturing budget is the least utilised budgeting system among these organisations.Practical implicationsThe study reinforces the communication power of budgeting and budgetary controls as SMEs and economic agents are not only aware of corporate objectives but are equally incentivised to support the attainment of these objectives.Originality/valueDespite the extensive application of GST among scholars, its use in budgeting and budgetary control literature, particularly among SMEs in developing contexts, is limited. In line with GST, this study indicates that when agents establish and implement a plan, they are motivated to pursue and realise the set expectations while consistently evaluating themselves for improvement opportunities.

Journal

Journal of Accounting in Emerging Economies – Emerald Publishing

Published: Jul 23, 2021

Keywords: SMEs; Budget; Budgetary control; Goal-setting theory; Manufacturing sector

References

  • Budgetary control as a measure of financial performance of state corporations in Kenya
    Adongo, K.O.; Jagongo, A.
  • Factors associated with the adoption and use of management accounting techniques in developing countries: the case of Romania
    Albu, N.; Albu, C.N.
  • Budget preparers' perceptions and performance-based budgeting implementation
    Aliabadi, F.J.; Mashayekhi, B.; Gal, G.
  • Old friends, new faces: motivation research in the 1990s
    Ambrose, M.L.; Kulik, C.T.
  • Cash flow management practices: an empirical study of small businesses operating in the South African retail sector
    Aren, A.O.; Sibindi, A.B.
  • Linking SME performance with the use of forecasting planning and control: empirical findings from Indian firms
    Augustine, B.; Bhasi, M.; Madhu, G.
  • The origin of term budget for business enterprises: the development of business budgeting from beginning to the 1940s
    Badem, A.C.
  • Beyond the M-form: toward a managerial theory of the firm
    Bartlett, C.A.; Ghoshal, S.
  • Leading from different psychological distances: a construal-level perspective on vision communication, goal setting, and follower motivation
    Berson, Y.; Halevy, N.; Shamir, B.; Erez, M.
  • Introducing SD modelling into planning and control systems to manage SMEs' growth: a learning-oriented perspective
    Bianchi, C.
  • Goals need implementation intentions: the model of action phases tested in the applied setting of continuing education
    Brandstätter, V.; Heimbeck, D.; Malzacher, J.; Frese, M.
  • Strategic management planning process (SMPP) as an organisation development intervention (ODI) to align values, goals and objectives and improve employee teamwork, engagement and performance: a case study of a family-owned business in Thailand
    Chienwittayakun, J.; Mankin, D.
  • Budget goal commitment and informational effects of budget participation on performance: a structural equation modelling approach
    Chong, V.K.; Chong, K.M.
  • The role of the human resources department in budgeting: evidence from Greece
    Cohen, S.; Karatzimas, S.
  • Goal-setting considerations for persuasive technologies that encourage physical activity
    Consolvo, S.; Klasnja, P.; McDonald, D.W.; Landay, J.A.
  • Shining lights and bad apples: the effect of goal-setting on group performance
    Curşeu, P.L.; Janssen, S.E.; Meeus, M.T.
  • Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature
    Daumoser, C.; Hirsch, B.; Sohn, M.
  • Raising response rates in mail surveys of small business owners: results of an experiment
    Dennis, W.
  • The perception of budgeting in Czech firms-results of a survey
    Dokulil, J.; Zlamalova, J.; Popesko, B.
  • Managerial deficiencies in the Small and Medium Enterprises (SMEs) in the craft industry: an empirical evidence of SMEs at Great Zimbabwe in Chief Mugabe's area
    Dumbu, E.; Chadamoyo, P.
  • Product innovation, budgetary control, and the financial performance of firms
    Dunk, A.S.
  • Cash management practices of small, medium and micro enterprises in the Cape Metropolis, South Africa
    Enow, S.T.; Kamala, P.
  • The informal sector and economic growth of South Africa and Nigeria: a comparative systematic review
    Etim, E.; Daramola, O.
  • The financial literacy of micro entrepreneurs in South Africa
    Fatoki, O.
  • Using budgets for performance evaluation: effects of resource allocation and horizontal information asymmetry on budget proposals, budget slack, and performance
    Fisher, J.G.; Maines, L.A.; Peffer, S.A.; Sprinkle, G.B.
  • ‘Continuous’ budgeting: reconciling budget flexibility with budgetary control
    Frow, N.; Marginson, D.; Ogden, S.
  • Institutions, agency and the institutionalisation of budgetary control in a hybrid state-owned entity
    Gooneratne, T.N.; Hoque, Z.
  • Multiple facets of budgeting: an exploratory analysis
    Hansen, S.C.; Van der Stede, W.A.
  • Practice developments in budgeting: an overview and research perspective
    Hansen, S.C.; Otley, D.T.; Van der Stede, W.A.
  • Beyond budgeting-a high-hanging fruit: the impact of managers' mindset on the advantages of beyond Budgeting
    Heupel, T.; Schmitz, S.
  • Planning for growth in a small company
    Hillidge, J.
  • New ways of setting rewards: the beyond budgeting model
    Hope, J.; Fraser, R.
  • Corporate budgeting is broken - let's fix it
    Jensen, M.C.
  • Budgetary participation in Turkey: the effects of information asymmetry, goal commitment, and role ambiguity on job satisfaction and performance
    Jermias, J.; Yigit, F.
  • Corporate budget planning, control and performance evaluation in Bahrain
    Joshi, P.; Al-Mudhaki, J.; Bremser, W.G.
  • Effect of budgeting process on budget performance of state corporations in Kenya: a case of Kenyatta national hospital
    Kamau, J.K.; Rotich, G.; Anyango, W.
  • Analysis of budgetary control practices and the management of micro and small enterprises at Kangemi Town in Kenya
    Kerosi, E.
  • Conceptual model of budgetary activity on firms performance: Malaysian SMEs case study
    Khin, E.W.S.; Yee, C.M.; Ismail, K.
  • Procedural justice, attitudes, and subsidiary top management compliance with multinationals' corporate strategic decisions
    Kim, W.C.; Mauborgne, R.A.
  • Budgeting practices and performance in small healthcare businesses
    King, R.; Clarkson, P.M.; Wallace, S.
  • The effect of goal setting on group performance: a meta-analysis
    Kleingeld, A.; van Mierlo, H.; Arends, L.
  • Planning: the key to small business survival
    Knight, R.A.; Knight, L.G.
  • Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms
    Laitinen, E.K.; Länsiluoto, A.; Salonen, S.
  • The motivational benefits of goal-setting
    Latham, G.P.
  • Work motivation theory and research at the dawn of the twenty-first century
    Latham, G.P.; Pinder, C.C.
  • The influence of voice and explanation on performance in a participative budgeting setting
    Libby, T.
  • Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice
    Libby, T.; Lindsay, R.M.
  • An analysis of the existence of a link between budgets and performance in economic entities
    Lidia, T.G.
  • Svenska Handelsbanken: controlling a radically decentralised organisation without budgets
    Lindsay, R.M.; Libby, T.
  • New directions in goal-setting theory
    Locke, E.A.; Latham, G.P.
  • Management accounting in small and medium-sized enterprises: current knowledge and avenues for further research
    Lopez, O.L.; Hiebl, M.R.W.
  • Traditional budgeting during financial crisis
    Lorain, M.A.; García Domonte, A.; Sastre Peláez, F.
  • Goal-setting theory of motivation
    Lunenburg, F.C.
  • Budget goal commitment, clinical managers use of budgeting information and performance
    Macinati, M.S.; Rizzo, M.G.
  • The use of budgets by small and medium enterprises in Cape Metropolis, South Africa
    Maduekwe, C.C.; Kamala, P.
  • Budgetary control, corporate culture and performance of small and medium enterprises (SMEs) in Malaysia
    Maelah, R.; Yadzid, N.H.N.
  • Conducting the pilot study: a neglected part of the research process? Methodological findings supporting the importance of piloting in qualitative research studies
    Malmqvist, J.; Hellberg, K.; Möllås, G.; Rose, R.; Shevlin, M.
  • The effects of budgeting process on financial performance of commercial and manufacturing parastatals in Kenya
    Maritim, F.C.
  • Performing for pay? The effects of ‘merit pay’on motivation in a public service
    Marsden, D.; Richardson, R.
  • Phase change materials integrated in building walls: a state of the art review
    Memon, S.A.
  • Relationship between budgeting and performance of remittance companies in Somalia
    Mohamed, A.I.; Ali, A.Y.S.
  • Analysis of the effectiveness of budgetary control techniques on organizational performance at DaraSalaam bank headquarters in Hargeisa Somaliland
    Mohamed, I.A.; Kerosi, E.; Tirimba, O.I.
  • The perception of small and micro enterprises in Durban central business district towards financial planning
    Mutanda, M.
  • Budgeting systems in the strategic management accounting
    Nazarova, V.; Shtiller, M.; Selezneva, I.; Kohut, O.; Seitkhamzina, G.
  • Goal-setting in educational video games: comparing goal-setting theory and the goal-free effect
    Nebel, S.; Schneider, S.; Schledjewski, J.; Rey, G.D.
  • Better budgeting or beyond budgeting?
    Neely, A.; Bourne, M.; Adams, C.
  • Data collection challenges experienced while conducting the International alcohol control study (IAC) in Tshwane, South Africa
    Nel, E.; Rich, E.; Morojele, N.; Harker Burnhams, N.; Petersen Williams, P.; Parry, C.
  • Outsourcing services in turbulent contexts
    Nordin, F.
  • Budgetary control and financial performance of small and medium sized enterprises in Rivers State
    Nwanyanwu, L.; Ogbonnaya, A.N.
  • The effect of budgets on financial performance of manufacturing companies in Nairobi county
    Onduso, E.O.
  • Budget use and managerial performance
    Otley, D.T.
  • The MCS package in a non-budgeting organisation: a case study of Mainfreight
    O'Grady, W.; Akroyd, C.
  • Survival and failure in small business
    O'Neill, H.M.; Duker, J.
  • Vertical information sharing in the budgeting process
    Parker, R.J.; Kyj, L.
  • A Vroom-Yetton evaluation of subordinate participation in budgetary decision making
    Pasewark, W.; Welker, R.
  • Behavioral agency theory: new foundations for theorising about executive compensation
    Pepper, A.; Gore, J.
  • Budgeting and its impact on financial performance: the case of non-Bank financial institutions in Ghana
    Pimpong, S.; Laryea, H.
  • The impact of the budgeting process on performance in small and medium-sized firms in China
    Qi, Y.
  • Designing and using research questionnaires
    Rowley, J.
  • The impact of financial support on the success of small, medium and micro enterprises in the Eastern Cape province
    Rungani, E.C.; Potgieter, M.
  • A scalable goal-setting intervention closes both the gender and ethnic minority achievement gap
    Schippers, M.C.; Scheepers, A.W.; Peterson, J.B.
  • Internationalisation of SMEs: opportunities and limitations in the age of globalisation
    Sen, A.; Haq, K.
  • A longitudinal study of small business strategic planning
    Sexton, D.L.; Van Auken, P.
  • Budgeting: perspectives from the real world
    Shastri, K.; Stout, D.E.
  • Performance contract and performance evaluation of state-owned enterprises: insights from the goal setting theory
    Simpson, S.N.Y.
  • Sampling techniques & determination of sample size in applied statistics research: an overview
    Singh, A.S.; Masuku, M.B.
  • 2018/2019 SME South Africa's SME landscape survey results: an assessment of South Africa's SME landscape: challenges, opportunities, risks and next steps' 2018/2019
  • The law as a social practice: are shared activities at the foundations of law?
    Smith, M.N.
  • Mixed methods sampling: a typology with examples
    Teddlie, C.; Yu, F.
  • Guidelines for developing, translating, and validating a questionnaire in perioperative and pain medicine
    Tsang, S.; Royse, C.F.; Terkawi, A.S.
  • Business sustainability: empirical evidence on operational skills in SMEs in South Africa
    Urban, B.; Naidoo, R.
  • The dark side of consecutive high performance goals: linking goal setting, depletion, and unethical behaviour
    Welsh, D.T.; Ordóñez, L.D.
  • The impact of financial planning and control on performance of SMEs in Australia
    Wijewardena, H.; De Zoysa, A.
  • The impact of planning and control sophistication on performance of small and medium-sized enterprises: evidence from Sri Lanka
    Wijewardena, H.; De Zoysa, A.; Fonseka, T.; Perera, B.
  • CEO characteristics and budgeting practices in emerging market SMEs
    Zor, U.; Linder, S.; Endenich, C.
  • Project benefit management: setting effective target benefits
    Zwikael, O.; Chih, Y.Y.; Meredith, J.R.