Budgeting for Transactional Control: The Case of a Russian Oil Company Subsidiary

Purpose The budget has traditionally been viewed as playing an essential role in management control. However, recently it has become the subject of intense critique. The critiques concern the way budgets are used as well as the fundamental drawbacks of the budgeting process. At the same time, a number of studies provided evidence that budgets are still being used in most organizations. Responding to the call for more examination of these issues against empirical evidence, this chapter studies contemporary budgeting practices in the case of a Russian oil company. Methodology/approach The chapter is heavily based on primary data collected from the interviews with company representatives. Secondary data collected from public sources was used as well. The empirical description is organized around a monthly budgeting process adopted in one subsidiary of the case company. The description is presented from the perspective of the financial department of the subsidiary company. Findings The study concludes that, in spite of all the critiques, budgeting is widely used in the Russian oil company. It is extensively used for control purposes, and the main focus of budgetary control is put on a transactional level. Originality/value The chapter traces the budgeting process currently adopted in one of the Russian oil corporations. This contributes to research evidence on Russian companies, an area which has previously received little attention from researchers and provides evidence supporting the view of budgeting as continuing to play an important role in many organizations.