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Staff Evaluation

Another reason to budget that is not considered important by the companies across all stages in this study is staff evaluation. Previous research (Fisher et al, 2002) states that budgets are an important tool for staff evaluation, since it makes employees increase their effort and task performance. Contrasting to this, Sivabalan et al (2009) have found that budget reasons relating to evaluation is not considered as important as control and planning reasons by companies. The results of this study show that staff evaluation is not considered important in any of the life cycle stages. One reason for this could be the highly uncertain environment I ompanies is operating in. According to Sivabalan et al (2009) budgets can be an irrelevant performance benchmark for companies operating in highly uncertain environments, hence budgets might not be used to evaluate staff under these circumstances. Another reason for this might be that IT companies are generally knowledge intensive companies that are selling services, and the output for this is more difficult to measure compared to the budget targets than it is for companies producing products. Therefore, staff evaluation as a reason to budget might be more important in other industries.

Determinants of Life Cycle Stage Categorization

Kallunki and Silvola (2008) found that there are large variations within the stages when it comes to size and age, and that the number of employees is associated with the life cycle stages. The results of this study support the findings made by Kallunki and Silvola (2008), as the only variable in terms of size that follows an increasing pattern for this sample is the number of employees. The study finds no pattern in size or age across the life cycle stages in the companies’ financial statements. Hence, the financial statements do not provide any evidence that size in other terms than number of employees or age affect what life cycle stage the companies are in.
The aim of this study is to further the understanding of how the budget use develops throughout companies’ life cycles, and whether the reasons to budget are different across the life cycle stages. The framework used by the study to fulfill this aim is Miller and Friesen’s (1984) life cycle model, which incorporates the stages birth, growth, maturity, revival and decline (see appendix A). Transitioning through the stages, the companies become increasingly complex and are expected to have a higher need for management accounting systems such as budgets. The reasons to budget that are studied within the life cycle stages are ten reasons (see table 1) within the categories control, planning and evaluation as proposed by Sivabalan et al (2009).
The results of the survey show that budgets are highly used in the companies across the life cycle stages, with an exception for the birth stage where the budget use is low. The budget use increases as the number of employees increases. This corresponds to the expectations of the study, since previous research (Greiner 1972; Miller & Friesen, 1984) found that that with a higher number of employees there are higher demands on the company to have more advanced budgets in order to communicate and control the operations.
Additionally, this study concludes that overall the companies in the different life cycle stages use the budgets for very similar purposes. Using the data retrieved in this study, there is no possibility to make any clear models of reasons each stage considers most important. From this research, the study cannot state if there is a certain set of budget reasons that is more or less relevant for each stage judging by the actual use of the budgets. However, the study can make inferences about some reasons being more important for some stages, which should be focused on by the company when developing the budget.

READ THE MACROECONOMIC DRIVERS OF GROWTH IN ZAMBIA

1. Introduction
1.1 Background
1.2 Problem
1.3 Purpose
1.4 Delimitations
1.5 Definitions of Key Terms .
1.6 Structure of the Report
2. Literature Review .
2.1 Budgeting .
2.1.1 Reasons to Budget
2.2 Life Cycle Theory .
3. Method
3.1 Research Approach
3.2 Research Sampl
3.3 Implementation of the Study
3.4 Survey Design .
3.5 Analysis of Data
3.6 Reliability and Validity
4. Results
4.1 Descriptive Statistics
4.2 Financial Statements .
5. Analysis .
5.1 Analysis of Findings Related to the Life Cycle Stages .
5.2 Further Analysis of Selected Findings
6. Conclusion