Embracing the Perks of Faulty Roadmaps: A Literature Review of Sociological Perspectives on Budgeting^*

Budgeting as a Symbolic Performance

The first subset of classification focuses on how Czarniawska-Joerges and Jacobsson's (1989) essay resonates with sociological perspectives that discuss how budgeting is capable of embedding information in ways that “make it highly symbolic” (Feldman & March, 1981, p. 171), a notion that has inspired accounting researchers to better understand “how its rational and natural aspects interact within the lived experience of individuals” (Boland & Pondy, 1983, p. 223). This line of inquiry can be traced back to Wildavsky's (1964) early work on budgeting as a cultural practice, in which the author argues that budgeting, in all its simplicity, becomes a rhetorical instrument. This common language reveals all the social norms organizational members abide by in a particular political environment. Since then, several studies, especially in the 1980s, have examined the symbolic and rhetorical use of budgets in organizations (Table 4).

A prominent example stems from Covaleski and Dirsmith (1988a), who infer that the symbolic function of budgeting plays an important role for organizations, especially in public—and, as they call it, often “poorly structured” settings—to create the impression of rationality to their wider social context. Studying the budgeting process at a state university, the authors find that budgeting is infused with the power and self-interest of various internal and external parties involved (in their case, the university, different parties within the university system, the various state agencies, and the legislators). The authors examine how the state university challenged the traditional budgeting regime when it became inconsistent with its goals and interests. These findings prompted many other studies to take a sociological view on budgeting in its larger social context, such as how individuals actively mobilize budgetary symbols to express their expectations regarding organizational policies and procedures (see also Ahrens & Ferry, 2015; Alam, 1997).

Indeed, using budgets as symbolic performances and rhetorical devices to cater to a wider discourse is now an often-encountered description in the literature. For example, Berland and Chiapello (2009) illustrate how budgets were historically upheld as the nexus of the decision-making process throughout the 20th century in France. Here, the authors illustrate how the budgeting function served as a symbol of control to defy economic and social problems throughout the 1930s and 1950s. Amans et al. (2015) illustrate that symbolic uses of budgets can vary depending on the situational factors in organizations. The authors describe how two French theaters referred to budgets differently, depending on their respective funding situation: one presented the budget as a source of information, whereas the other used it as a negotiating tool vis-à-vis external stakeholders. Importantly, these studies imply that different uses of budgets are a response to managing multiple and competing interests and that different budgets in different organizations or historical and political contexts can become symbols of their respective culture, situational factors, and accountability relationships (see also Goddard, 2004).

Similarly, studies have stated that budgets can become powerful symbolic performances to inspire notions of control in areas of business that genuinely foster different agendas, such as innovation or creativity. There are rich illustrations of this in popular culture, including that from Maier (2017), who examines budgeting processes in a television series production context. The author finds that, by its symbolic and aesthetic attributes, the budget would “bring together creative aspirations … and the financial parameters of the project” (p. 83). Jeacle and Carter (2012) observe similar dynamics in the fashion industry, where budgeting became a form of “stage prop” that helped organizational members sustain a team impression “by mediating between the creativity and control concerns” (p. 719). These insights involve a common notion that budgetary symbols infuse wider control discourses through “spectacles” (Uddin et al., 2011) among various actors from different backgrounds.

Other studies concerned with the symbolic uses of budgeting further corroborate this idea as they adopt a dramaturgical perspective. For example, Colville (1989) examines budgeting at the English Police Authority as “a play about accounting, budgeting, and organizations” (p. 89). Throughout this play, the author finds that individuals portray and enact different rationales met in the budget (e.g., accounting, political, financial, and service) to support their interests. Along the same lines, in a more recent study about budgeting in the Halifax Regional Municipality, Corrigan (2018) examines how managers perform “a ‘good’ budget even though it imposes an unwanted tax increase” (p. 13). The author shows that this was possible as higher tax rates were embedded in a complex set of accounting calculations in the budget, which enabled managers to make them “disappear from view” throughout their performance, even though the subject of taxation remained in plain sight of the audience. In a study of budgeting meetings, Wiegmann et al. (2024) highlight the importance and skills of “the actors” behind symbolic budgeting performances, who may establish themselves as trustworthy performers vis-à-vis their audiences. These studies underline how individuals skillfully relate to other stakeholders by using imagery and impression management strategies and how the social construction of budgets largely depends on how actors portray them (see also Krauss, 2021; Samuelson, 1986).

Underlying the symbolic uses of budgets is often the idea that budgets have the power to make decisions about resource allocation appear more rational and somewhat indisputable. This is discussed by Porter (1995), who suggests that budgets are associated with a spirit of rigor and often replace personal trust in a quest for objectivity, accountability, or transparent decision-making. Porter also suggests that this is one of the reasons why the business world has long embraced the “aura of objectivity” surrounding budgets to measure and communicate an organization's economic activities to various stakeholders. After all, budgets are simple. They consist of numbers as their dominant metaphor (K. Robson, 1992) to represent value that can easily be compared and mobilized, as these numbers condense specific qualities and the complexity of the world into common indicators and thereby help to simplify the amount of information people have to process (see also Espeland & Stevens, 1998). To this point, many studies support the notion that it is the use of numbers and the inherent quantification of budgets that make them powerful and somewhat authoritative symbols, especially when evoking otherwise ambiguous and complex settings concerning themes such as forecasting, strategy, or performance evaluation (Kadous et al., 2005; Rowe et al., 2012). According to Porter (1995), “A decision made by the numbers (or by explicit rules of some other sort) has at least the appearance of being fair and impersonal. … Quantification is a way of making decisions without seeming to decide” (p. 8).

By virtue of these traits, Carlstrom (2012) argues that budgets can contribute to providing “plausible explanations for irrational strategies” as they make them appear more objective. Similarly, Goretzki et al. (2018) find that budgeting numbers can be particularly apt to persuade others into certain interpretations of a good or bad performance (see also Peters, 2001). Another example stems from Marginson and Ogden (2005), who show that managers consider budgets suitable to signal “having a plan,” especially in settings that they perceive as highly complex, ambiguous, and overwhelming (see also Marginson, 1999). The authors find that, even without significant practical relevance, budgets can provide structure and motivation for managers and other stakeholders, mitigating perceived ambiguity.

However, this symbolic power of budgets does not always have positive implications and has its own issues. For example, Tooley and Guthrie (2007) argue that budgets can be used as a rhetorical tool to serve unintended political purposes or are not necessarily in the best interest of organizations or the wider public. Pettersen (2001) makes these adverse effects visible by showing that budget deficits were systematically created among hospitals in Norway as a symbol to cope with the constraints of a new governmental payment system. Other examples include Armstrong (2011), who highlights the role of budgetary symbols in enabling bullying structures within organizations, as well as Lapsley and Rios (2015), who find that budgets can be misused to obscure and deceive via political decisions under their symbolic functions, such as by transforming transparency into information overflow and rendering certain decisions more opaque and making it difficult for individuals to understand what is going on (see also Czarniawska, 2010). Due to these issues, Hope and Fraser (2003) conclude that budgeting as a symbolic performance may, in the best case, decouple from its genuine control function and, in the worst case, lead to “a breakdown in corporate ethics” (p. 108).

The idea behind studies that examine budgets as a symbolic performance is that while budgets may often be criticized from an instrumental point of view, they are equally suitable in their role as “well-constructed accounts” (Elsbach, 1994, p. 84) to socially construct reality, shape a general perception of organizations, and legitimize actions (Covaleski & Dirsmith, 1986; Pendlebury & Jones, 1985). As such, this stream of literature helps to draw a link between the instrumental and sociological view by embracing the “different linguistic and expressive components of budgeting” (Samuelson, 1986, p. 35) as key to why budgets persist in organizations (see also Krauss, 2021; Sandalgaard & Bukh, 2014). Ultimately, an understanding of budgets as symbolic performance may inspire (mainstream) accounting researchers to look beyond the effective use of budgets and examine how the things that are accounted for in a budget may impact the perspectives of individuals on what is (or will be) important or what deserves attention. This stream of literature shows that despite their technical appearance, budgets are far more sophisticated from a symbolic point of view: they can express, embody, and justify important organizational traits.

Budgeting as a Means of Communication

The second subset of classification turns to Czarniawska-Joerges and Jacobsson's (1989) notion of budgeting as a means of communication. As early as the 1970s, Anthony Hopwood discussed in his pivotal essays on performance management the dysfunctional side effects caused by budgeting and how it is detrimental to long-term organizational decision-making. In light of this “management dilemma” (Hopwood, 1972, p. 175), Hopwood points to another, more dominant role of budgeting as a means of interaction. He acknowledges that no budget will ever provide “a perfect representation of the underlying structure of economic events” (Hopwood, 1974, p. 29), which is why the way in which individuals negotiate and communicate a budget will truly define its value as a means of control. While more traditional perspectives of budgeting tend to portray the dominance of instrumental uses, Hopwood's work marked the cornerstone for sociological perspectives to embrace the role of budgeting as a site for communication that can bring together various actors to discuss the allocation of resources, both within and beyond organizations (Table 5). The main idea behind these studies is to understand budgeting as “a dialogue, learning and idea creation machine” (Abernethy & Brownell, 1999, p. 189; see also Burchell et al., 1980) to challenge the notion that organizations legitimize their actions merely by using budgets as authoritative management control tools. Instead, these studies often embrace a more balanced view of the organization, its members, and the social environment.

Budgeting as a means of communication has been widely explored in the sociological sphere, especially regarding how budgeting has become important in organizational negotiation. While some studies suggest that individuals may raise concerns and refuse budgets as a means of control (Jönsson, 1982), others show that budgets are less criticized when the level of participation and involvement of managers during budget negotiations is high (Polesie, 1981; Sponem & Lambert, 2016). Yet this participation process is seldom straightforward, especially when multiple actors with diverging agendas are involved (Covaleski & Dirsmith, 1983; Ezzamel et al., 2007). For example, in a study of the Royal Danish Theatre on budgetary control in the performing arts, Christiansen and Skærbæk (1997) explore the idea who budgeting can be understood as the attempt to find a “common ground” between actors who genuinely seek to advance competing agendas. The authors describe the implementation of budgetary controls as a process characterized by communication by which “various forms of conflicts and games may be observed, … different rationalities are brought face-to-face in the discourse on implementation” (p. 405). In a similar context, that of an opera house, Trevisan and Mouritsen (2023) underline how budgeting becomes important in handling multiple actors' agendas in such creative settings. The authors infer that budgeting enables compromise between those actors in pursuit of “a higher common good” (p. 1).

Along these lines, many studies in this area take a micro-sociological view of budgeting as a social achievement between actors and a product of human interaction in which people relate to each other and their environment through communication. A prominent example of this stems from Fauré and Rouleau (2011), who closely follow the different stages of a budgeting process within a construction firm that had undertaken a new partnership strategy. Specifically, the study draws upon the conversations between accountants and operational managers (among others) to explore how budget numbers are rendered acceptable over time before they can be reported to external stakeholders. The authors show that accountants and managers exert strategic competence in trying to combine competing demands for individual accountability in financial performance on the one hand and cooperation on the other (Abernethy & Brownell, 1999; Frow et al., 2005). Through this communication, coordination, and compromise process between actors, the study shows that individuals develop a mutual understanding of their respective accountabilities, meaning that budgeting can become far more of a collective cocreation exercise between organizational actors rather than an intentional and individual one.

Budgeting as a site for communication relies on the context in which communication occurs, which is specific to each organization. For example, Hyndman et al. (2014) show that the same wider budgeting reforms and discourses in the public sector may lead to very different local implementations, depending on how managers discuss and translate various ideas and concepts. Similarly, Townley (1996) illustrates that these individuals become implicated in broader political strategies for discharging accountability relationships through budgeting processes (see also TerBogt & Van Helden, 2011). Boland et al. (1986) thus argue that budgeting is embedded in a broader sensemaking process, as individuals construct meaning around budgets only via communication and dialogue. As such, many studies suggest that it is through budgetary communication that themes such as performance management (e.g., Dunk & Perera, 1997; Fernandez-Revuelta Perez & Robson, 1999), accountability (Llewellyn, 1998), and risk (Collier & Berry, 2002; Endenich, 2014) become socially meaningful in organizations, as participation and interaction in budgeting processes may help individuals make better sense of others, their organization, and their role within it (Bryer, 2014).

A prevalent literature substream that has emerged on the foundation of these ideas concerns budgeting as a participatory practice, moving the focus from the individual to the collective (e.g., Kanodia, 1993; Llewellyn, 1998; Shields & Shields, 1998). As Anessi-Pessina et al. (2016) discuss, budgeting can often create multilevel funding structures that establish accountability relationships among public and private stakeholders (see also Aleksandrov et al., 2018; Grossi et al., 2023). As Célérier and Cuenca Botey (2015) find, budgeting can thus become a powerful communication tool to shape wider accountability practices, establish emancipatory perspectives,3 and foster social change among various actors. However, budgeting may also not always enable “the right kind” of communication. As Chwastiak (2006) notes, budgeting can equally be “ill-suited” in some contexts, illustrating through the Vietnam War that, while budgeting plays a vital control function in most profit-driven organizations, “it has not succeeded in imposing rational control on the turmoil of war” (p. 29).

What links most studies that understand budgeting as a means of communication is that budgets are often the center and outcome of interaction between multiple actors with potentially competing interests. This is not to say that general organizational communication and control structures depend on budgeting alone. For example, Østergren and Stensaker (2011) show that the absence of budgeting can trigger fruitful new means of interaction and control that “alter the relationship between corporate management and division management” and that thus “new lines of dependency are created between divisions” (p. 149). Yet these perspectives stimulate the idea that budgets can take on an important social function, as they can bring together various actors under certain prerequisites with common or deviant goals and agendas. This can inspire important research questions that depart from instrumental views on budgeting and somewhat underline how budgets work as facilitators of social interaction−for example, how budgets embody indicators of political strength, as well as the strategic competence of individuals involved in the budget-making process (e.g., Hofstede, 1968).

Budgeting as an Expression of Values

The sample's third (and largest) set of studies has focused on what Czarniawska-Joerges and Jacobsson (1989) discuss as budgeting as an expression of values. Because budgets are powerful symbolic tools and provide a suitable means of communication, they are carriers, pivotal to a set of values (or logic) that guide and influence organizational members in many ways. According to this view, budgeting offers “an area where different cultures, values, rationalities, and logics can meet, combine, and enrich, but also conflict, compete, or ignore and avoid each other” (Anessi-Pessina et al., 2016, p. 505). Many studies adopt this view to promote a need to alter traditional budgeting practices (Covaleski et al., 1985; Hansen et al., 2003) and adapt them to other prevailing values, especially in complex organizational settings where different values are competing (Table 6).

Studies highlight that budgeting is prone to follow dominant values that define a given organizational environment and that budgeting links those values and internal structures (e.g., Jacobs, 1995; Mayston, 1998; Merchant, 1985; Wildavsky, 1975; Willoughby, 2014). For example, in a historical study on the role of the state in determining the use of budgets within Japanese aviation companies, Noguchi and Boyns (2012) suggest that the commonly perceived control function inherent to budgeting may be the result of coercive financial pressures on organizations (see also Preston et al., 1992). Similarly, Rautiainen (2010) shows that dominant values and institutional pressures in different environments may significantly shape budgeting practices (see also Mutiganda, 2013; N. Robson, 2008). As Kuruppu et al. (2016) conclude, budgeting is thus “a practice of power and domination rather than a means of fostering political emancipation” (p. 1). In other words, budgeting can be used by those in power (e.g., management) to enforce certain practices within and beyond organizations, sometimes at the disadvantage of those with less power (e.g., employees) who would favor different practices.

In contrast, Kilfoyle and Richardson (2011) argue that those perspectives tend to attribute too much power to the social structures of organizations while neglecting “the relationship between, or relative influence of, individual agency” (p. 183). In a synthesis of prevalent management accounting research, the authors infer that budgeting research would benefit from better incorporating how organizational actors with different interests and values influence budgeting practices and how these actors, in turn, interact with structuration to generate institutional change. Following this notion, studies have inquired how budgeting as an expression of values provides a suitable means to inspire and manage periods of change. A prominent example stems from Ezzamel et al. (2012) and their study of schools in the United Kingdom. The authors explore the tensions that can emerge in such settings where multiple (dominant and subordinate) values and so-called “institutional logics” (e.g., business, community, and market logic) may clash and where budgets tend to become objects of dispute. The study shows how different interpretations of the school system competed within the budgeting process and how the introduction of new budgetary practices was ultimately able to foster institutional change, as these practices defined new values, responsibilities, and identities that conflicted with the “old norms” of the educational field (see also Bunce et al., 1995; Clark, 2001; Covaleski et al., 2013; J. R. Edwards et al., 2002; P. Edwards et al., 1996; Fowler, 2009).

Such a connection between social values and change is made explicit in a study by Oakes et al. (1998), in which the authors study the business planning processes of provincial museums and cultural heritage sites in Canada. The authors illustrate how private and public values (or logic) may intertwine in such organizations and how competing values shape reform processes around resource allocation activities. They suggest that budgetary control is about adopting what is valued in the field in which organizations operate and changing the field. Similar to Ezzamel et al. (2012), the authors foster the connection between business planning and institutional change, illustrating how this connection ultimately has the power not only to define new responsibilities and identities within organizations but also, as highlighted by Oakes et al. (1998), to link business planning (e.g., through budgets) and a “pedagogic exercise.” The attempt seeks conformity and informs or challenges wider social environments. Budgeting becomes a powerful means for an organization to “define its own criteria for the production and evaluation of its organizational identity” (p. 263).

This line of analysis echoes across many other studies, such as Khalifa and Scarparo (2021), who examine how budgeting practices have the power to initiate wider social change and even help resolve grand challenges such as gender equality. From a micro-perspective, studies show that organizational members may be empowered to reshape their professional identities (Becker et al., 2014) or discipline behavior (Kunzl & Messner, 2023) through budgeting. As Kaufman and Covaleski (2019) emphasized, different values impact how budgets are perceived and used in organizations, and those values (formal and informal) are not necessarily replaced or merged, but they may co-exist in tension through time. The idea of such a coexistence of values resonates with research on budgeting in organizations that genuinely foster competing institutional logic (e.g., Battilana et al., 2012; Battilana & Dorado, 2010; Battilana & Lee, 2014). For example, Irvine (2005) shows how budgeting, rather than being perceived as an “unwelcome intrusion,” was integrated into the sacred agenda of a church. Similarly, Jacobs (1998) examines how budgeting, instead of being a threat to the medical profession in New Zealand, became an accepted tool of peer review and education that could even strengthen ties within the medical profession.

However, as showcased in these studies, the general ability to draw upon multiple values through budgeting is not always without friction (cf. Chenhall et al., 2013). Studies find that budgeting in complex settings with multiple prevailing values can present many obstacles (Pallot, 2001; Schiff & Lewin, 1970; Wallander, 1999; Zan & Xue, 2011). For example, Comerford and Abernethy (1999) show that significant role conflicts emerged when healthcare professionals sought to adapt their role to cater to the financial management of hospital resources (see also P. Edwards et al., 2005). Equally, Boitier and Riviere (2013) observe that those conflicts may contribute to rather unstable budgeting solutions, which Parker (2002) finds to be riddled with issues of “control by compromise” among organizational members (see also Bourn & Ezzamel, 1987; de Waal et al., 2011; P. Edwards et al., 1999; Lukka, 1988). Frow et al. (2010) suggest that at the heart of these issues often lies the need to meet the financial targets of budgets, which may stand in contrast to other values, professional identities, and the need for flexibility and innovation (see also Frow et al., 2005). Indeed, actors do not automatically adopt budgeting practices that promote a departure from previously held values (Agyemang & Broadbent, 2015). As Hyvonen and Järvinen (2006) show in the empirical context of hospitals, budgeting practices themselves, once established, can be very resistant to new values or institutional and organizational change (see also Ezzamel et al., 2014). This is corroborated by Becker (2014), who argues that the change or abandonment of budgeting practices needs strong advocates within organizations and that the abandonment or change of a central accounting control practice such as budgeting remains fragile. Henttu-Aho and Järvinen (2013) show that even if new management accounting tools replace budgeting, the planning, control, and evaluation values inherent to budgets remain among organizational members, albeit in different forms.

Taken together, there is a divide in this stream of literature that examines budgeting as an expression of values. On the one hand, budgets are viewed as facilitators of change through their value-carrying function. On the other hand, budgets are found to foster resilience precisely because they are often tied to prevailing social values and institutions. Indeed, these studies imply that budgeting practices are both impactful and resilient, which means that altering budgeting can become challenging (e.g., when altering triggers larger cultural or institutional change processes). These notions resonate well with the overarching theme of this review, as there may be the same ambivalence in the literature: the budgeting research traditions remain impactful and resilient. Nonetheless, as this analysis reveals, the motivation and effort of accounting researchers to shift attention from longstanding instrumental views toward various fruitful sociological functions of budgeting is worthwhile.

Embracing the Perks of Faulty Roadmaps

As this analysis shows, budgeting from a sociological point of view is considered a suitable “common language for messy processes” that can foster wider control discourses, bringing together and fostering coordination and compromise among a diversity of actors with potentially competing agendas. Empowered by this capability, budgets provide a systematic site for actors to express and debate the different values that they consider important (e.g., Christiansen & Skærbæk, 1997; Covaleski & Dirsmith, 1983; Ezzamel et al., 2007, 2012; Fauré & Rouleau, 2011). Arguably, budgeting is one of the few management accounting tools that has the unique capability to do so, combining such a wide array of social features, which may be precisely those that maintain its organizational relevance and make it the object of a significant body of research, as the “only organized critical mass of empirical work in management accounting” (Brownell & Dunk, 1991, p. 703).

Why Should There Be No Unified Theory of Budgeting?

Kenno et al. (2018) start and end their comprehensive review with the longstanding question of why there is no unified theory of budgeting (see also Gibran & Sekwat, 2009; Key, 1940; Malmi & Granlund, 2009). These authors ultimately conclude that “because of the variety of issues and questions researchers aim to ask of budgeting, a unified theory of budgeting may never exist” (p. 533). This review adds to this claim in various ways. The focused inquiry of sociological perspectives on budgeting underlines that budgeting is exhaustively researched from different angles, even in this specific stream of literature alone. Yet, somewhat ironically, focusing on this particular perspective on budgeting reveals that there seems to linger a much more fundamental lack of consensus on the generic purpose of budgeting—something that may encompass questions of why there is no “one true” theory. The study of budgeting, much like the accounting discipline as a whole, is subject to a paradigmatic divide (Repenning et al., 2022), enabling many ways to study budgeting (Luft & Shields, 2006). Tying into the discussion above, instrumental views and positivistic approaches generally anchor the functional use of budgeting, including its technical efficiency. This contrasts starkly with sociological perspectives, which embrace the ambiguity and uncertainty in budgeting as a prerequisite for social processes to emerge. The idea here is that if budgets bore “one single truth” to organizational actors, one should be concerned about the accuracy and efficiency of budgeting, as there would be no need to further contextualize resource allocation and no room for reflection and debate. This is, however, far from reality.

As this analysis shows, sociological perspectives embrace the messy reality of budgeting, as they largely agree that budgets thrive on precisely not offering solid plans and a clear direction to actors but rather on offering something to be desired and yet, at the same time, to be debated and reflected upon over time (cf. Mouritsen & Kreiner, 2016). In that sense, it seems the traditional criticism of budgets (often targeted at its instrumental value) does nurture its social role and processes, which are somewhat grounded in politics and power; this also means that sociological budgeting research, to some extent, thrives precisely on its dissonance with regard to instrumental views. Here may lie the root of why budgeting research as a whole may continue to exist in a constant state of “productive friction” (Stark, 2009) between different perspectives and paradigms, one that may (and possibly should) never be overcome precisely because it is fruitful and inspiring to different perspectives, including their assumptions about organizational reality and corresponding research streams.

Budgeting as an Act of Organizational Identity Work

While the literature has identified the various social roles of budgets as powerful symbols, sites for communication, and carriers of values, it seems to provide a limited or partial understanding of the corresponding identity issues involved as another “layer” in the sociological study of budgeting (Empson, 2004; Gioia et al., 2013). As Abrahamsson et al. (2011) note, “[e]mpirical evidence suggests a reciprocal relationship between accounting and identity since accounting practices are an important means of (de)legitimizing an organization's current self-perception” (p. 345).

Understanding how budgeting shapes an organization's (self-)perception requires incorporating how it relates to organizational identity (issues) and the corresponding identity work of organizational members. Many complexities in the field arise on the grounds of organizational identity threats related to budgets, cost overruns, and corresponding controversies, especially in highly sensitive settings where budgets involve taxpayer money or when they relate to societal issues, such as in the public context, public-private partnerships, or megaprojects (see also Krauss, 2021). Through their social functions, budgets are pivotal in shaping a general perception of an organization and impacting individuals' focus on what deserves attention. Organizational identity must be reconsidered not merely as one of many “situational factors” (Amans et al., 2015) in budgeting but as a particularly strong and often underestimated driver of management accounting practices and change. This may include how budgeting relates to various social evaluation constructs associated with organizations (e.g., reputation, status, stigma), how organizations are categorized based on their budgets as an embodiment of values that align or conflict with those of a particular stakeholder group, or how budgets relate to issues of non-legitimacy. Ultimately, these identity issues should have a bearing on conducting studies on the social dynamics of budgeting, ranging from what questions should be asked regarding how to analyze and write about empirical material.

Future research in this area could inquire into important parts of budgetary identity work and the different forms of strategic competence (Fauré & Rouleau, 2011) involved when organizational members mobilize the social traits of budgets, especially in skillfully presenting a budget to render an aspirational identity of their organization concrete. Wider studies on identity work have highlighted the importance of “storyable items” (Goretzki & Messner, 2019) to establish and maintain aspirational identities, which may encompass budgets as powerful symbols. Especially when budgets are challenged as faulty roadmaps, presenting a budget differently—in some instances at least—may contribute to a productive dialogue between certain actors (or not) precisely because of its otherwise perceived imperfections (Jordan & Messner, 2012). In other words, actors may strategically use budgeting as a token of their identity work to foster an aspirational identity of their organization to “engage, resist, and influence audiences to shape their broader contexts” (Helms et al., 2019, p. 8).

Beyond Budgeting in a Sociological Sense

While perspectives on budgeting as a cultural and social practice offer valuable insights, especially in institutionally complex settings (e.g., public companies or cultural organizations), there is still relatively little knowledge about why budgeting is maintained as an organizational practice despite often providing poor value to users. While sociological perspectives in the literature offer partial explanations for this, far more can be uncovered regarding the wide nexus of political forces behind budgeting, the multitude of stakeholders, and individual intentions at play—social “undercurrents” and tacit relationships that are sometimes masked and mystified by the technical and seemingly rational appearance of budgeting.

Especially in times of globalization and digitalization, when organizations are becoming increasingly complex, examining these forces would arguably be important to “bring people back in” (Levi, 1988, p. 7) to the study of budgeting as a social and cultural practice that responds to wider social norms and challenges. Against this backdrop, important questions emerge: How are budgets intertwined with the confidence of individuals in planning and decision-making? How can one better understand budgeting as an emotional and sometimes chaotic arena for individuals, rather than a structured process? Equally, what is the relevance of informal processes behind budgeting?

Similarly, it should be noted that budgeting today is one of the most traditional forms of managing accounting in organizations (Brownell & Dunk, 1991; Luft & Shields, 2006), which begs for more historical inquiries on how budgeting in organizations of the past may look different from those of the future. This review provides a source of fruitful learnings and a good starting point for such an inquiry, as studies point to an evolution of sociological perspectives on budgeting. A central theme of more historical studies has been that organizations must conform to certain social norms to gain legitimacy (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1987). As empirically illustrated in this analysis, along with studies such as those by Covaleski and Dirsmith (1988a, 1988b), budgeting often plays a significant role in organizations being perceived as legitimate by external stakeholders. This is because due to their interrelated social functions, budgets can signal conformity to certain norms or practices that are widely accepted or established. However, recent studies somewhat defy the notion that budgeting is only externally informed. Prominent studies like Amans et al. (2015), Ezzamel et al. (2012), and, more recently, Kaufman and Covaleski (2019), examine budgeting more as a process between individual actors around the allocation of resources (see also Christiansen & Skærbæk, 1997; Fauré & Rouleau, 2011). The main idea behind these studies is to challenge the idea that organizations achieve legitimacy merely by converging toward dominant institutions and understanding budgeting as a local product of human interaction.

This evolution in the sociological study of budgeting implies a shift from wider levels of analysis toward more individual-centered perspectives or from institutional to agency-centered views (Kilfoyle & Richardson, 2011), which presents a promising area for future research. For example, studies could look at how budgeting can present a personal challenge, a mirror of the self-understanding, sometimes improvisation, and emotional state of organizational members in a quest for appreciation of their stakeholders and others (Repenning et al., 2022; Roberts et al., 2006). This is a dimension where urgent work is required, as the more informal and individual nuances involved in budgeting remain to be uncovered (Vollmer, 2019), as well as all the managerial implications, challenges, and impairments that may be attached to them.

Rethinking a Link Between Budgeting and Legitimacy

Along similar lines, this analysis may (re)open the longstanding question of how organizations use budgeting to gain legitimacy among various stakeholders. Legitimacy can be understood as the broad-based social approval of stakeholders, “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574). To this end, the reviewed studies suggest that budgets fulfill various social functions that can help managers justify their actions, create the impression of a capable organization, or, more generally, construct realities that may impact how others perceive and assess an organization. This notion has also been used extensively in the accounting literature on sustainability reporting (e.g., Aerts & Cormier, 2009).

However, despite these valuable insights, the questions about why budgets become legitimate and to whom, not necessarily if they do, remain. Some studies show that perceptions of budgeting can differ between stakeholder groups, especially when budgets remain uncertain, and what is legitimate to one actor or social group may not be to others (e.g., Amans et al., 2015; Hyndman et al., 2014; Krauss, 2021). The extant literature on budgeting appears to sideline this matter, often taking for granted that if budgets are used to comply with social norms or engage in political bargaining to challenge those norms, a critical mass of stakeholders would ultimately buy into a budgeting compromise that is considered legitimate over time (e.g., Ezzamel et al., 2012). There also appears to exist a broader conceptual issue in that most prevalent studies on budgeting in institutionally complex settings focus on budgets as a means to gain legitimacy within contexts that already exhibit high degrees of general social approval, such as universities, schools, or cultural organizations (Covaleski & Dirsmith, 1988a, 1988b; Ezzamel et al., 2012). Regarding types of organizations, even though there are often public and sometimes heated debates about resource allocation, there is no questioning of these organizations' fundamental alignment with broader social norms, which enables them to gain access to valuable (public) resources, a key trait of legitimacy (Suchman, 1995). In other words, society usually does not fundamentally oppose education or culture, even if budgeting issues are linked to corresponding organizations.

As such, it would be interesting to see more studies in those empirical settings that do not automatically resonate with broad social approval, especially when considering a possible link between budgeting and legitimacy threats. As Hudson and Okhuysen (2009) note, “Organizations that are not legitimate survive and thrive. In spite of this acknowledgment, we know little about organizations that do not have broad-based social approval or legitimacy” (p. 134; see also Zuckerman, 1999).

Organizations that fundamentally struggle with broader social approval present a promising empirical domain for future budgeting research, as it is where more vital challenges of managers in accessing resources needed to secure the survival of their organization are visible. As Anessi-Pessina et al. (2016) argue, these challenges may increasingly define previously established sectors in the public space, in which the authors find that budgeting remains “remarkably under-investigated and under-theorized” (p. 509) concerning how budgeting can foster a “truce” between a multiplicity of actors with competing agendas and under the eyes of the public. Given the inherent ambiguity of budgets, especially in complex settings, this raises important questions: What social functions and processes make actors agree (or not) on what good budgeting is in certain settings? How can one budget reasonably be expected to fulfill the “impossible mission” to bring together or create the overall impression of a capable organization in the eyes of many stakeholders with different agendas? How does the competence of budget makers impact how organizations convey the perception of legitimacy toward certain stakeholders or the general public?

Budgeting as a Manifest of Organizational Power Relations

This review suggests that another reason why budgeting remains a widely used management accounting tool despite all its shortcomings may be that certain stakeholders can strategically mobilize it to exert their power positions through the social functions of budgeting (i.e., they reinforce existing structures through budgeting to render some things “more important” than others). This role echoes across many studies that discuss budgeting as a suitable platform for maintaining organizational relationships based on those with power against those with less power. For instance, consider how institutional studies like Covaleski and Dirsmith (1988a, 1988b) or, more recently, Ezzamel et al. (2012) illustrate the scrutiny of external stakeholders involved when organizations seek to decouple themselves from socially valued (and even mandated) forms of existing budgetary practices. In such a case, powerful stakeholders may reinforce compliance with (or through) common budgetary practices as their interests are at stake, trying to maintain hierarchies of authority and status (see also Ahrens & Ferry, 2015; Mutiganda, 2013). Budgeting can give rise to significant social pressures and, as such, can maintain power structures in a given political environment.

Accordingly, these power relations may shed a different light on how budgets are mobilized because, to defy power structures, organizational members might have no choice but to “define their own criteria” (Oakes et al., 1998, p. 263) through a budget, by which they may seek to “liberate” their organization in interactions with stakeholders. As such, more research is needed on the implied power relations behind budgets, which may be defined not necessarily by their function of control but rather by their capability to break with control to instead change the status quo—to trigger social processes of political bargaining with external stakeholders, where individuals challenge existing infrastructures or enable shifts in what should be considered “normal” or not.

Against this backdrop, budgeting as a power device certainly warrants more attention, as this view can offer fruitful insights into, for example, which organizational actors may shape the making of budgets more than others, which individual interests are conveyed through the budget, or how budgets can cause conflict as they empower or become meaningful to some actors but not to others. When acknowledging that budgets have a political role for organizations, it is important to recognize they also remain widely debated as faulty roadmaps, asking who benefits from budgeting and why they should have a bearing on discussions on how budgets are approved, managed, perceived, and evaluated. To this end, this review underlines the lingering need for more sociological studies in the accounting literature concerned with budgeting in the broader social, economic, and political environment in which organizations are embedded.