Middle Managers’ Engagement in Autonomous Strategic Actions: Does It Really Matter How Top Managers Use Budgets?

Fostering middle managers' entrepreneurial behavior is a key concern for established firms. Budgets are one of the most widely used management tools in organizations, and several conceptual articles claim that the way in which they are used, most notably in an interactive way, affects middle managers' autonomous strategic actions (ASA). This type of entrepreneurial behavior in established firms focuses on opportunities outside the firms' currently served product-market domains. Using structural equation modeling and a formative measurement instrument for interactive use of budgets, we test these claims advanced in conceptual literature within a broad sample of large firms. We find that the way in which budgets are used does not significantly impact middle managers' engagement in ASA. In contrast, firms' boundary systems and middle managers' autonomy seem important antecedents to ASA.