Beyond Budgeting in Small and Medium-Sized Enterprises: A Comparative Multi-Case Study of Equinor, Entra, Hurtigruten, and Tussa

Abstract

Purpose - The Master thesis aims to understand how Beyond Budgeting (BB) as a Management Control System (MCS) has been designed and used in companies of different sizes. Research design - We apply an interview-based, multi-case study approach on four Norway-based companies, (2 SMEs vs 2 MNCs). The case descriptions follow Malmi & Brown’s MCS-as-a-package (2008), while the Findings, and subsequent Discussion compare the four cases along the 12 BB principles of Purpose, Values, Transparency, Organization, Autonomy, Customers, Rhythm, Targets, Plans & Forecasts, Resource Allocation, Performance Evaluation, and Rewards. Findings – ‘Autonomy’, ‘Transparency’, and ‘Resource Allocation’ are highlighted as the key BB principles. MNCs focus on ‘Autonomy’ and accountable teams to a greater extent than SME. As compared to SMEs, MNCs implement broader control spans by means of performance planning systems which, in turn, promotes a higher level of ‘Transparency’ in the MNCs due to higher accessibility of information. Additionally, MNCs use matrices of spending limits for ‘Resource Allocation’, while SMEs exhibit more centralized decisionmaking due to the higher financial risk of erroneous allocation decisions. We find that size is a non-determining factor in explaining differences in the use and customized design of BB principles while the scalability of BB is unproblematic. In practice, the use of BB is intertwined with both a change trajectory and the use of other control tools (Agile, Better Budgeting, OKRs, BSC), making any claims towards specific effectiveness difficult to support. Limitations - The selected SME case companies are best approximations and resemblant of medium-size rather than small-size companies. Only a limited, existing research-based analysis of the 12 BB principles was provided. Topics for future research include using an alternative MCS framework for analysis (Van der Stede & Merchant, 2017; Simons, 1995b) and the influence of corporate governance on BB implementation preferences and pathways. Originality/value – The thesis is the only case study thus far which addresses the praxis of the BB principles from a configurational perspective, both theoretically (Malmi & Brown MCS-as-a-package) and practically (SMEs vs MNCs). Keywords Beyond Budgeting, SMEs, MNCs, Management Control System, Beyond Budgeting Principles