The Boundary Between Planning and Incremental Budgeting: Empirical Examination in a Publicly-Owned Corporation
- 1 December 1981
- journal article
- research article
- Published by Institute for Operations Research and the Management Sciences (INFORMS) in Management Science
- Vol. 27 (12) , 1421-1434
- https://doi.org/10.1287/mnsc.27.12.1421
Abstract
This paper is a study within the field of public budgeting. It focuses on the capital budget, and it attempts to model and analyze the capital budgeting process using a framework previously developed in the literature of incremental budgeting. Within this framework the paper seeks to determine empirically whether the movement of capital expenditure budgets can be represented as the routine application of incremental adjustments over an existing base of allocations and whether further, forward-looking adjustments can be found. Its setting is a British publicly-owned corporation. The paper proposes an extended model of incremental budgeting which explains absolute change in budget allocations by introducing variables expressing: current expenditure outturn, over- or under-spend of previous allocations, previous budgetary cuts, and wider financial pressures in the corporation's environment. Planning variables are then included in an attempt to uncover purposive behavior. The analysis reveals different patterns of allocation for peripheral and for mainstream investments. The former appear to grow in an incremental fashion with no response to leading planning variables. The latter exhibit responsiveness to planning variables, and allocations do not take the form of routine incremental adjustments to the existing base. An interpretation of the results is undertaken. The analysis points to revisions of existing theory and suggests fresh ways of looking at, and systematically modeling, the organizational system of resource allocation.decision process, resource allocation, incrementalism-expanded model, planning, public capital budgetingThis publication has 5 references indexed in Scilit:
- The Budgetary Base in Federal Resource AllocationAmerican Journal of Political Science, 1980
- On Change: Or, There is No Magic Size for An IncrementPolitical Studies, 1979
- Assessing Incrementalism in British Municipal BudgetingBritish Journal of Political Science, 1976
- Budgetary Strategies and Success at Multiple Decision Levels in the Norwegian Urban SettingAmerican Political Science Review, 1975
- A Theory of the Budgetary ProcessAmerican Political Science Review, 1966