Recently traditional budgeting has been the subject of considerable criticism because of the traditional fixed character. The case against traditional budgeting and advocating for the use of key performance indicators (KPIs) for management control had been argued by Hope and Fraser (2003), who proposed that traditional budgeting should be eliminated as it is fundamentally flawed. Results of empirical studies on the usefulness of budgeting are ambiguous. Libby and Lindsay reported that despite critique of budgets, the majority of organizations continue to use them and adapt their use to account for the mentioned problems. The premise of a modern budgeting system is its flexibility and focus on KPIs.

Because budgets are a common way of handling agent-principal issues, we question what would happen if budgets were removed. Eliminated budgeting was often accompanied by implementation of multi-dimensional performance measurement systems (PMSs), in which traditional accounting measures are replaced by KPIs, which include non-financial and financial indicators.

Design (properties) of PMS and budgeting systems depends on numerous contextual variables such as the external environment, competition, technology, utilization of contemporary technologies, organizational structure, organizational size, strategy, and national culture. These contextual variables may influence several factors, especially: the extent to which an organization sticks to traditional budgeting and implements more modern budgeting methods; the properties (type) of implemented PMSs; and the prevailing utilization of these systems (diagnostic or interactive). Yet, there is no comprehensive empirical model that would explain the influence of the contextual variables on the design of PMSs and budgeting systems.

The main objective of the survey is to identify the determinants of the design of budget systems and multi-dimensional performance measurement systems, as well as properties of these systems and the influence of these systems on organizational behavior and ultimately on organizational performance.

The study focuses on a large-scale cross-sectional empirical survey of budgeting practices in medium-sized and large-scale organizations in the Czech Republic. The sample was created on the basis of the Albertina firms database, where restrictive conditions were set as: industrial manufacturing producer, company size limited to a minimum of 50 employees and CZK 256 mio. in sales. The final sample size for the survey was 1367 subjects. Traditional statistical techniques such as multiple regression, ordinary least square (OLS), bivariate correlation analysis, and Structural Equation Modelling (SEM) were used. Confirmatory factor analysis (CFA) was applied to evaluate the construct validity of the concepts and quality of the measurement model.