Designing a Budgeting System with Planned Confusion

Abstract

Contemporary accounting literature has debated the merits and defects of both the traditional budgeting process and new challenger zero-base budgeting on the premise that managers should choose one or the other, but not both simultaneously. Recent developments in organization theory suggest that such a choice may be incompatible with the design strategy necessary for organizations experiencing a dynamic and uncertain environment. The author advocates the design of budgeting systems with planned confusion, where traditional budgeting, as a stabilizing process, coexists with zero-base budgeting, as a destabilizing process.