Dissatisfaction expressed over budgeting usually leads to two different approaches to the issue: some firms wish to abandon budgeting altogether, while others wish to improve it. In the literature we can observe a number of studies focusing on the adoption of advanced budgeting systems. Some studies analyze companies that abandoned the traditional approaches to budgeting or dramatically simplified them. Despite the wide discussion of the traditional budgeting system’s limitations, surveys show that only a small minority of firms wish to abandon the current budgeting practices (Finland 15%, USA and Canada 6%). This research focused on the statements presented in the literature criticizing traditional budgets.
The first set of Czech survey questions was based on common opinions on the unpredictability of the business environment, and investigated how Czech firms undertake predicting the behavior of their given business environment. Subsequently, the links between budgets and corporate strategies were examined. This reflects the criticism focused on the weakness of these links. The authors examined the methods Czech companies employ to reflect budgets in their corporate strategies. Finally, an examination was conducted on links between budgets and performance targets. This section was based on the negative practice of using budgets as a “fixed performance contract”. Herein, the authors examined how Czech companies use their budgets for performance measurement.
This research failed to prove the hypotheses related to the inflexibility of the budgeting and weak linkage of budgets to corporate strategy. However, it proved another hypothesis related to the low level of budget use for performance targets. These results point to the fact that some tendencies in budgeting practices observed worldwide are not as strong under Czech conditions.