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Jan 2006

Budgeting and innovation: complements or contradictions

Budgets and innovation have long been viewed as antithetical: budgets encourage cautiousness and risk-averseness, while innovation demands creativity and risk-taking.

However, an increasingly globalised economy demands that firms achieve both simultaneously. How is this being attempted? How are firms seeking to reconcile the twin but supposedly incompatible imperatives of budgetary control and creative innovation? The purpose of the project was to provide some insight into this issue. Specifically, the study aimed (1) to look at the control processes that might be involved in reconciling budgeting and innovation, and (2)to document and understand the issues that might arise therefrom.

Senior executives and accounting practitioners may wish to consider the form and content of the overall management control framework, particularly the ways in which a variety of controls including budgetary control can be combined together into a coherent whole.

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Budgeting and innovation: complements or contradictions