Post-Shock Budgeting: A Methodological Framework

Paolo Candio

International Journal of Business and Management, 2024, vol. 19, issue 2, 171

Abstract: Traditional budgeting approaches have been criticised and called into question as not being able to adapt to management dynamics and context-specific planning needs. This is especially the case when major crises occur, with increased forecast uncertainty as a result. Adaptive techniques such as rolling and continuous budgeting have been developed to address such concerns, though trade-offs between the resulting optimisation of the planning, control and performance evaluation functions exist. A key, though not exclusive, effect of crises is the likely nonlinearity of effects of unit prices which will tend to revert to the mean, or in other words, rebound and gradually converge to pre-shock levels or to a steady state. Aiming to fill this research gap, this study presents a methodological framework, framed within a survival analysis paradigm, which can be used for post-shock budgeting. Following a description of the mathematical properties and steps required for application, the framework is illustrated using a stylised example of operational budget with results being compared between linear and nonlinear price rebound trajectories. The presented framework is a relatively simple and flexible solution to the issue of post-shock budgeting which can be readily developed and adapted, therefore lending itself to a widespread use.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ccsenet.org/journal/index.php/ijbm/article/download/0/0/49959/54035 (application/pdf)
https://ccsenet.org/journal/index.php/ijbm/article/view/0/49959 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijbmjn:v:19:y:2024:i:2:p:171

Access Statistics for this article

More articles in International Journal of Business and Management from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().