Organizational culture change as a result of a change in budgeting systems

Michael D Class, University of Pennsylvania


The budget system employed by an organization affects more than just the allocation of resources within that organization. It also affects the behaviors of the actors in that organization and thus affects its culture. Therefore a change in budget systems can also be expected to change the organization's culture. This study followed a university's change process from an Allocation model of budgeting to a Responsibility Center Management (RCM) model of budgeting. This study employed case study methodology to explore the change process employed at a private, religiously sponsored, urban, research university as it went through its conversion from the Allocation to the RCM model of budgeting. Using structured, open ended interviews with the executives, vice presidents and deans at the university, the study identifies a series of expected and intended changes in the behaviors of responsibility center managers at the university. Primary among these was to build a culture of entrepreneurship with greater accountability, integrated strategic and financial planning, decentralized decision-making, and greater management flexibility. A significant concern that emerged was that sub-optimization due to intra-mural competition among operating units could result from this conversion. Recommendations were offered for other organizations contemplating such a change, as well as directions for future research.

Subject Area

Higher education

Recommended Citation

Class, Michael D, "Organizational culture change as a result of a change in budgeting systems" (2004). Dissertations available from ProQuest. AAI3124681.