How do controllers and managers interpret budget targets?

Lili‐Anne Kihn (School of Management, University of Tampere, Tampere, Finland)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Publication date: 20 September 2011



The purpose of this study is to further our understanding of how and why interpretations of budget targets differ from one person to another even in the same business unit.


A qualitative case study research approach is adopted, involving a review and analysis of the literature and interviews conducted among controllers and managers of a highly successful business unit.


Both the theoretical and empirical results suggest that organizational budgetary processes do not provide a similar understanding of budget targets for each person. While some shared interpretations are evident, individual‐level variations occur in the personal and subjective meanings that controllers and managers give to budget targets in their own consciousness, situationality and corporeality. A personal historical basis for understanding may impact a manager's interpretation of budget targets, but the interpretations can also be dynamic and change over time.

Research limitations/implications

The study is both facilitated and limited by its basic assumptions and approaches, and the findings may be most relevant to companies with similar profiles. Nevertheless, the study furthers our understanding of the characteristics of controllers and managers and their perception of the meaning of this important feature of accounting in practice.

Practical implications

It could be highly useful to jointly discuss the intended primary purposes and nature of organizational budget targets. Otherwise, people may understand targets in different and perhaps even contradictory ways, which could in turn impair the functioning of control systems.


This paper contributes to current budgeting research in that it interprets individual‐level differences.



Kihn, L. (2011), "How do controllers and managers interpret budget targets?", Journal of Accounting & Organizational Change, Vol. 7 No. 3, pp. 212-236.

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