Transition from traditional budgeting models to new alternative approaches influenced by global changes in business environment

Abstract

In recent years budgeting process and budgeting models have become very topical issue as the main focus is over its efficiency in the hyper competitive business environment. This study examines traditional and new innovative short-term planning models and their flexibility in fast-changing environment. First, the study analyzes the reasons that boost companies to apply more flexible models and review some of budgeting models used by organizations and their relevance to contemporary business environment. In this paper, I use deductive approach for analyzing of quantitative data collected by questionnaire. I present the results of a survey of different sized companies in Bulgaria in order to 1) fill the lack of information about budgeting practices in Bulgarian; 2) gain empirical evidence for level of empowerment of managers in planning, control and decision making activities and the methods of performance evaluation, i.e. level of flexible of Bulgarian companies to respond of changes in the business environment and 3) determine the tendency on budgeting practices and provide recommendation for future research. Overall, Bulgarian companies have realized the need to adjust their budgeting processes and models to contemporary business environment. In spite of criticism of academics and practitioners about inadequacy of annual budgets to the fast-changing environment, the companies continue to use elements from traditional budgeting. The long-term view and constantly updating of budgets are elements of budgeting processes that prevail in the answers of respondents. Flexible forms of performance evaluation and rewards are not widely used in Bulgarian companies. Based on these findings I provide recommendation for improvement and area which must be further investigated.