BUDGETING PRACTICES IN CZECH MANUFACTURING COMPANIES: AN EMPIRICAL STUDY

Though academics and professionals may disagree, budgets play a key role in business performance management and management control. Due to the lack of empirical evidence concerning budgeting practice in Central and Eastern Europe, an empirical questionnaire-based survey on budgeting in the Czech Republic was conducted. This paper analyzes and discusses the responses of 222 Czech manufacturing companies and delivers results on (a) the extent of budget use, (b) the purposes of budgets in management control, (c) the impact of budgeting on the behavior of managers and employees, and (d) satisfaction with the role of budgeting. The findings show that budgets still play an important role in Czech manufacturing companies, especially in planning, controlling, and performance assessment. The highest intensity of the usage of budgets was found to be for cost control and corporate performance assessment. In general, respondents expressed their satisfaction with budgetary control systems, especially with budgets as a performance management tool at the corporate level and at the level of organizational units. The respondents emphasize the enabling, rather than coercive, use of budgets and do not perceive the negative effects of budgeting on behavior as of high significance.