Culture as a recoupling mechanism: Rationales for construction of budgetary slack in logistics

Abstract

Purpose

To study the use of budgeting in the uncertain and unpredictable context of seasonal logistics in the Arctic. Specifically addresses the question of why and how budgeting turns out to be the main management control tool in an extremely unstable environment.

Design/methodology/approach

Built on a case study of a Russian oil-producing company operating in The High North, this chapter reports on the rationales for use of budgetary slack by different divisions within the company.

Findings

Inflexible budgeting better fits into the (natural/geographical) context than into the business process. In this respect, excessive budget detalization and informational update may be not facilitating the operational process but confusing. Decoupling demonstrated by a budgetary slack is the normal condition for stable organizational performance.

Practical implications

Instead of setting up fences between the divisions, budgeting may be considered a converging and an adjusting factor to assess collective performance. Social embeddedness of budgetary slack in contemporary organizations sets the scene for other types of budgeting games based on trust, norms of reciprocity and collective performance.

Originality/value

The new – cultural – dimension introduces decoupling in a new perspective by demonstrating the integrating or coupling meaning of cultural practices.

Citation

Nazarova, N. (2014), "Culture as a recoupling mechanism: Rationales for construction of budgetary slack in logistics", Performance Measurement and Management Control: Behavioral Implications and Human Actions (Studies in Managerial and Financial Accounting, Vol. 28), Emerald Group Publishing Limited, Leeds, pp. 105-126. https://doi.org/10.1108/S1479-351220140000028011