Budgetary Participation: The Effects of Information Asymmetry, Goal Commitment, and Role Ambiguity on Job Satisfaction and Performance

Abstract This study proposes a comprehensive model which empirically investigates the antecedent, mediating and outcome variables of budgetary participation. We propose that the information asymmetry between superiors and subordinates creates the need for budgetary participation. Accordingly, this study hypothesizes that the outcomes (i.e., job satisfaction and performance) of budgetary participation will be mediated by goal commitment and role ambiguity. Based on a questionnaire survey of 194 middle level managers in Turkey, this study found that role ambiguity mediates the budgetary participation-job satisfaction and budgetary participation-performance relationships. The results are consistent with the view that the primary benefit of budgetary participation is to decrease role ambiguity, leading to more job satisfaction and better performance. Furthermore, we found that goal commitment mediates the budgetary participation-performance relationship. This result suggests that participation in the budgeting process increases goal commitment leading to better performance. Key words: Budgetary participation, information asymmetry, goal commitment, role ambiguity, job satisfaction, performance

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Budgetary Participation: The Effects of Information Asymmetry, Goal Commitment, and Role Ambiguity on Job Satisfaction and Performance 1. Introduction There is an abundance of research investigating the relationship between participative budgeting and performance. The popularity of this topic is based on the widely-held premise that participation in decision- making in general, and in the budgetsetting process in particular, is the ideal approach to governance. Researchers have argued that participative budgeting leads to more job satisfaction and better performance for subordinates because it leads them to perceive that they are being treated by their superiors as valuable partners in the decision- making process, which in turn creates higher moral, greater motivation, and higher commitment. While previous research has shed some important light on the relationships between budgetary participation and performance, few studies have used a comprehensive model which considers not only the antecedent conditions which create a demand for participation, but also variables that mediate the relationships between budgetary participation and performance. Some researchers have argued that incorporating the antecedents and mediating variables may lead to a better understanding of the relationship between budgetary participation and performance (e.g., Hopwood, 1976; Brownell, 1982; Chenhall & Brownell, 1988; Kren, 1992; Shields & Young, 1993; Shields & Shields, 1998; Chong, 2002; Chong et al, 2006; Parker & Kyj, 2006; Leach-Lopez et al, 2007; Chong & Johnson, 2007). For example, Shields & Young (1993) suggest that the mixed results of previous studies are due to the use of incomplete models. They argue that researchers need to develop models that consider the particular antecedents of participative budgeting and investigate the

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consequences of participative budgeting by taking theoretically- based intervening variables into account. With the exception of two recent studies (e.g., Maiga 2005; Chong & Johnson, 2007), previous studies have not employed a comprehensive model which considers the antecedents, intervening variables and consequences of participative budgeting. Both studies, however, use task uncertainty as the antecedent of budget participation. In contrast to these two previous studies, our study uses an agency theory perspective in arguing that the need for budgetary participation is primarily the result of the information asymmetry between superiors and subordinates which characterizes the budgeting process (Penno, 1990; Kirby et al, 1991; Shields & Young, 1993).Therein, we also argue that goal commitment and role ambiguity will mediate the relationship between budgetary participation and job satisfaction as well as budgetary participation and performance. Furthermore, most previous studies on budgetary participation were conducted in developed countries such as the United States and Australia. Few studies have looked at these issues in developing countries. Our study addresses this gap by investigating the antecedents, mediating variables, and consequences of budgetary participation in Turkey, a developing VISTA country that is playing an important role in international markets (the term VISTA refers to Vietnam, Indonesia, South Africa, Turkey and Argentina and has been coined in recent years to address the undeniable and inevitable economic emergence of this new set of actors) (Watanabe, 2010). The impacts of budgetary participation on various outcome variables might be different in this setting than in a developed country. For example, Jermias & Setiawan, (2008) argue that top management in developing countries is often reluctant to share information with subordinates due to the fear that their subordinates will manipulate and

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misinterpret that information. This is partly because many senior managers are politicians and like to maintain a power differential with their subordinates (Alam, 1997). In a similar vein, Uddin & Hopper, (2001) assert that managers in developing countries might participate in the budgeting process because they fear being punished, not because they want to make meaningful contributions. The authors state that the reason for this is that these countries are characterized by high unemployment rates and do not adequately recognize and protect human rights. Based on a questionnaire survey of 194 middle level managers, we hypothesized and found that budgetary participation decreases managers’ role ambiguity, resulting in more job satisfaction and better performance. Furthermore, we found that goal commitment mediates the budgetary participation-performance relationship such that it increases participation, which leads to higher commitment and, in turn, improved performance. However, the mediating effect of goal commitment on the relationship between budgetary participation and job satisfaction is not statistically significant. With respect to the antecedent variable, this study found that there is no significant relationship between information asymmetry and budgetary participation. This study contributes to existing literature on budgetary participation and practice in three ways. First, it proposes a more comprehensive model by incorporating the antecedent, mediating and outcome variables of budgetary participation. As such, this study shed some important lights on understanding the antecedents of budgetary participation and the conditions under which budgetary participation improves job satisfaction and performance. Second, the study was conducted in Turkey where there is no previous study on budgetary participation can be found in the literature. Turkey is a particularly interesting

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The remainder of the paper is organized as follows. car park management and technology. Given these unique characteristics. sea transportation. they usually win their bids to undertake the municipality’s projects. Instead. Most of these firms also provide services to the public. Our respondents are managers of firms owned by the Istanbul Metropolitan Municipality which operate in various sectors of the economy. research design and how to measure the variables used in this study.e. the effect of participation on firm performance might be different for these firms as compared to firms in more conventional free-market economies. Section three explains the sample selection. simply allowing managers to participate in the budgeting process does not have a beneficial effect for the company. As most of these firms are the biggest entities in their respective sectors.setting for such a study because the government (i. Section five provides a 4 . although the Istanbul Metropolitan Municipality owns these firms. The benefits of participation in budgeting process can only be realized when managers have a better understanding of their role. such as the US and Australia (where most of the previous studies were conducted). mineral water filling. the results of this study indicate that the direct effect of participation on performance is not statistically significant. Section four presents the results of the statistical analyses. they are by law private entities and have not been given the monopoly rights. However. including road construction. Thus. and are committed to those goals. Finally. perceive the goals they are accountable for as attainable. Section two discusses previous related literature in order to develop the hypotheses.. they have to compete against private companies for contracts with the municipality. municipalities) owns most Turkish large-size companies and therefore has a significant influence on the management of these companies.

general discussion of the main results.. Chenhall 1986).. Leach-Lopez et al. 1981. but also the variables that might mediate the relationship between participative budgeting and its various outcomes (i. the limitations of the study and directions for future research in this area. Parker & Kyj. Wentzel. 1983.. Milani. Chong & Johnson. 5 . Shield & Young (1993) argue that information sharing is the most important antecedent for budgetary participation. Shields & Young (1993) take this issue one step further in proposing that researchers need to develop theories that consider not only the antecedents of participative budgeting. More recent studies on participative budgeting have incorporated antecedents and/or mediating variables (e. Brownell & McInnes 1986. 2. 1982. Foran & DeCoster. 2002. First. 1975. 2007). 2006. Brownell. Earlier studies tend to focus on the consequences of participative budgeting and have reported mixed results (e.e. 2002. With the exception of Chong & Johnson.g. 1974. we use information asymmetry as the antecedent of budgetary while the other two studies use task uncertainty as the dependent variable.. Lau & Tan. Kenis. Brownell (1982) suggests that researchers need to specify the conditions under which budgetary participation would be effective before investigating its consequences. Chong et al. The study reported here differs from Chong & Johnson (2007) and Maiga (2005) in three ways.g. Related Literature and Hypotheses Participative budgeting has attracted much attention in accounting and management literature. Merchant 1985. none of these studies incorporate the consequences of participative budgeting. job satisfaction and performance). Chong. 1979. 2007. 2006. 2003. Shields & Young (1993) argue that the mixed results of participative budgeting research are due to the incomplete models used by previous researchers. (2007) and Maiga (2005).

. Allowing subordinates to participate in the budgeting process suggests that they are perceived as Job satisfaction has traditionally been thought by many researchers and practitioners to cause job performance. According to this theory. Christensen. Chen et al.g. subordinates tend to be reluctant to reveal this information to their superiors unless the superiors incur significant monitoring costs or provide subordinates with an incentive for doing so. found that job satisfaction and performance are related because the two constructs are the results of employees’ attitude toward their job.Second. 2004)). Bowling. private information about the tasks they are held accountable for (Baiman. (2007). 1990. while both Chong & Johnson (2007) and Maiga (2005) use only goal commitment. our study uses both role ambiguity and goal commitment as mediating variables. we use a comprehensive model by considering the antecedent (information asymmetry) and mediating variables (goal commitment and role ambiguity) of budgetary participation and its consequences (job satisfaction and performance)1. Recent studies (e. have revealed that the cause and effect relationship between job satisfaction and performance does not exist. [Insert Figure 1 here] Antecedent variable: Information asymmetry Agency theory prescribes that subordinates have specific. we consider job satisfaction and performance as two separate outcomes of budgetary participation. we use both job satisfaction and performance as the outcome variables. Following Shields & Young (1993). Therefore. while the other two studies only use performance. And third. 1 6 . for example. 1982). 2007. in this study. however. Bowling. It is salient to note that Chenhall & Brownell (1988) found that the use of role ambiguity as a mediating variable provides useful insights into understanding the impact of budgetary participation on job satisfaction and performance. Nouri & Parker (1996) argue that budgetary participation allows subordinates to reveal their private information. which leads to better performance on their part and to economic gains for the company. Chenhall & Brownell (1988) also consider job satisfaction and performance as two separate outcomes of budgetary participation..

Shields & Young (1993) contend that one of the primary benefits of budgetary participation is that it facilitates the sharing of information during the budget. Locke et al. 1987) indicated that subordinates participated in the budget setting process. 72% of the respondents in a survey of US firms (Umapathy. For example. (1981) concur with this observation in stating that the most successful function of participation is that it allows workers to express good ideas about how to improve their performance. and available resources. corporate preferences. They further assert that by participating in the process of setting their targets subordinates can provide useful information to superiors about business and operational opportunities and risks. Participation in the budget-setting process also tends to result in more realistic budgets that set attainable targets. Similarly. An extensive review of studies on participative. 1968).decision making led Locke & Schweiger (1979) to report that information sharing is the single most important determinant of the effectiveness of participative decision making. which will in turn increase their motivation to achieve those goals (Locke.setting process. It is therefore not surprising that budgetary participation is a common practice in countries such as the US. This will positively impact subordinates' motivation because they will see the targets as within their reach and worth their effort worth the effort (Locke. they are more likely to perceive their goals as consistent with their personal aspirations.valuable members of the company (Lawler. Merchant & Van der Stede (2007) argue that allowing employees to participate in and influence the process of setting their performance targets promotes information sharing with regard to business opportunities. As a result. 1989). given that they know more about their local workplace 7 . 1968. 1981). Hollenbeck et al.

1993) report that information asymmetry creates the need for budgetary participation. 1998. Therefore. Previous discussions indicate that information asymmetry is an important determinant of the need for budgetary participation.environments than their superiors. the higher the information asymmetry between 8 . Based on a questionnaire survey administered to 98 corporate controllers of the Standard and Poor’s 500 companies. 1996). budgetary participation might provide an opportunity to communicate perceptions of business opportunities and risks. Murray (1990) argues that participation may mitigate the information asymmetry problem in two ways: 1) the budget levels may be determined more correctly because superiors receive local information which will lead to better measurements of performance. and Shields & Young. which in turn helps them to develop better strategies for achieving the budgets (Murray. Shields & Young (1993) found that there is a positive association between the extent of information asymmetry and the use of participative budgeting. Shields & Shields (1998) conducted a survey among 60 managers who were graduates of an executive MBA program. 1990) and to provide subordinates with adequate resources (Nouri & Parker. and to ensure that the budget is aligned with their personal aspirations. to negotiate more reasonable budgets. For subordinates. and 2) superior may be able to develop better strategies which can be in turn conveyed to the subordinates. The information sharing that is facilitated by budgetary participation allows superiors to gain access to subordinates’ private information. Two empirical studies ( Shield & Shields. They found that the need to share information is positively and significantly related to managers’ reason for participating in the budgeting process.

g. Nonetheless. 2007.superiors and subordinates. organizational behavior and accounting literature. Chong et al... Hopwood (1976) emphasizes the need to identify the conditional factors that determine the usefulness of the budgetary participation program. As a result. 2006. Mediating variables There is an abundance of research on the impacts of budgetary participation on performance in management. Chong et al. . Consistent with these recent studies. 2002). the greater the need for budgetary participation. Shield & Young (1993) and Locke & Schweiger (1979) for an extensive review of studies on budgetary participation. Goal Commitment 2 Please consult Brown et al. Parker & Kyj. we argue that the participation-job satisfaction/performance relationships are not direct and propose that goal commitment and role ambiguity mediate these relationships. Chong & Chong. especially since situational variables might improve or impede its effectiveness Recent studies have documented that the direct effects of budgetary participation on job satisfaction/performance may be influenced by various mediating variables (e. more recent studies on budgetary participation have considered factors which would make participation more or less successful (Jermias & Setiawan. these previous studies have reported inconclusive results2. Specifically the following hypothesis will be tested: H1: There will be a positive relationship between information asymmetry and level of budgetary participation. Chenhall & Brownell (1988) propose that researchers consider the circumstances in which participation might or might not work. 2002). In a similar vein. 2006. 2006. (2009). Wentzel. Leach-Lopez et al. 2008. 9 .

Murray (1990) argues that budgetary participation will have a positive impact on goal commitment and result in better outcomes. Previous discussions indicate that the impact of budgetary participation on job satisfaction and performance is mediated by goal commitment. Locke & Latham (1990) argue that participation will lead subordinates to accept the goals as r personal objectives. it is desirable to include subordinates in the budget setting process because it will enable them to negotiate and eventually agree on the budget.involvement in company goals. Locke (1968) contends that the most direct effect of participation is subordinates’ commitment to the decisions which have been reached. In a similar vein. Allowing subordinates to have some control over the budget will also lead them to perceive that their superiors trust them. acceptance of the goals. This may in turn increase the level of subordinates’ ego. Hofstede (1991) asserts that participation increases commitment to a goal because subordinates internalize the goals through the process of information sharing which occurs during the goal setting process. Accordingly. Locke (1968) proposes that employees’ behavior is influenced by their conscious ideas and intentions. (2001) argue that goal commitment is a critical aspect of the relationship between budget and performance because a budget can have no motivational effect if employees have no commitment to the goals for which it they are held accountable. Klein et al. 1968). If subordinates are committed to the budgets they tend to be more 10 . and commitment to achieving them (Locke.Goal commitment is the determination to pursue a goal and an unwillingness to abandon it or lower its standard (Hollenbeck & Klein. Locke & Latham (1990) argue that subordinates will only consider putting effort into a task if they perceive that the budget is achievable and worth the effort. 1987).

H2b: The relationship between budgetary participation and performance will be mediated by goal commitment such that budget participation increases goal commitment. Chong et al. 1964). 1988). and 4) the consequences of completing or not completing the tasks. 2006. Chong. 2) how the tasks are to be performed. Fischer. leading to higher job satisfaction. 2002.. leading to higher performance. Role Ambiguity Chenhall & Brownell (1988) argue that there is no theoretical argument which can support the claims that budgetary participation has a direct effect on job satisfaction or performance. Chenhall & Brownell. Hence. 3) how the performance will be evaluated.satisfied with their job and to put more effort into attaining the budget. 11 . Rizzo et al. Role ambiguity refers to a lack of clear understanding about the actions one is required in order to perform one’s job correctly and efficiently (Kahn et al. (1964) propose that role ambiguity may include: 1) what tasks are expected to be performed.. Instead. the following hypothesis will be tested: H2a: The relationship between budgetary participation and job satisfaction will be mediated by goal commitment such that budget participation increases goal commitment. 2001. (1970) contend that high role ambiguity causes lower productivity. Kahn et al. they contend that the effect of budgetary participation on performance is mediated by other variables such as role ambiguity. Previous studies have hypothesized that role ambiguity is detrimental to individuals as well as to organizations. 2006. The negative consequences of role ambiguity have been documented in a number of settings and the studies have consistently reported the negative impact of role ambiguity on job satisfaction/performance (Wu & Norman.

how to perform those tasks. we test the following hypothesis: H3a: The relationship between budgetary participation and job satisfaction will be mediated by role ambiguity such that budget participation decreases role ambiguity. and psychological withdrawal. and the consequences of meeting or not meeting superiors’ expectations. They predict and find that decreased role ambiguity improve job satisfaction and performance. They report that role ambiguity has a significant negative effect on both job satisfaction and performance. how their performance will be evaluated. dissatisfaction. Subordinates’ participation in the budgeting process may clarify their understanding of the tasks they are expected to perform. leading to higher job satisfaction. Research Method 12 . Fischer (2001) administered a questionnaire survey to 169 auditors and found that role ambiguity was negatively associated with their job satisfaction and performance. H3b: The relationship between budgetary participation and performance will be mediated by role ambiguity such that budget participation decreases role ambiguity. We argue that role ambiguity will mediate the effect of budgetary participation and job satisfaction/performance. 3. In accord with Chenhall & Brownell (1988). Chenhall & Brownell (1988) investigated the intervening effects of role ambiguity on the budgetary participation-job satisfaction/performance relationship by administering a questionnaire survey to 36 middle-level managers from a large manufacturing company. Chenhall & Brownell (1988) propose that the indirect impact of budgetary participation on performance is operated initially from the capacity of budgetary participation to reduce role ambiguity.more tension. leading to higher performance.

It is therefore interesting to investigate whether previous studies’ findings with regard to the impact of budgetary participation on various outcomes can be applied to this different context. Variable measurement This study used six variables to test the hypotheses presented in the previous section. However. Most of the firms are the biggest in their respective sector because the routinely get contracts with the municipalities which permit them to provide services to the public. we identified 246 respondents and sent them the following materials: a letter explaining the purpose of the study. The instrument has been used extensively in previous studies in various settings 13 . they are legally private companies which compete with other private firms. which represented an 83 % response rate. so our final sample consists of 194 responses. and car park management. and a self-addressed. including road construction. We chose these firms because they possessed unique characteristics. Subsequent to this initial contact. Ten responses were excluded from further analyses because they were incomplete. but they operate like a government unit and are governed and heavily influenced by the municipality. sea transportation. these companies do not have the monopoly rights and face competition in their sector.Sample A survey questionnaire was used to collect data from firms in the Metropolitan Istanbul area. We contacted the accounting managers of each firm to ascertain their willingness to participate in our study and to gain access to those of their subordinates who were responsible for setting and executing the budgets. These firms operate in various sectors. stamped envelope. That is. mineral water filling. the questionnaire. We received 204 responses.

2006. Leach-Lopez et al. An abbreviated version of the questionnaire used in this study is presented in Appendix A. 1988. We use the instrument developed by Rizzo et al. He contends that the six items in the instrument are based on the definition of information asymmetry prescribed by agency theory and detailed in the literature Participants were asked to distinguish between the information possessed by superiors and subordinates. Milani. 2005. 2006. 2002. The response scales ranged from (1) not at all to (5) very much. (1970) to measure role ambiguity. Brownell. Information asymmetry was measured using the six-item scale developed by Dunk (1993). Kren. Wu & 14 . Wentzel. 1990).. 2002. Parker & Kyj. It is one of the most widely use instruments for the measurement of role ambiguity (Chenhall & Brownell. The response scales extended from (1) my superior has much better information to (5) I have much better information.upon goals. Jermias & Setiawan. 1975. 2007. Merchant. Goal commitment was measured using three questions originally developed by Locke (1968) that has been modified by prior research (e. The response scales ranged from (1) strongly disagree to (5) strongly agree.g. The extent of participative budgeting was measured using an instrument first developed by Vroom & Mann (1960) which has been modified by subsequent and previous studies (e. Chong. Respondents were asked to indicate their level of commitment to the agreed. 1982. 2007.g.and demonstrated an acceptable level of construct validity and reliability (e. Brownell. 2006. Chong et al. Maiga. 1982). 2002. 2008).. 1992.g. 1985.Wentzel. Chong & Johnson. Wu & Norman. 1993. Respondents were asked about their degree of influence on preparing and executing their budgets. Murray.. Dunk..

Brownell & McInnes. Lau & Tan. how much authority they had.. 1997). current expectations. Chenhall & Brownell. Data Analysis and Result Construct validation We begin our analyses by assessing the reliability of the constructs used in this study. Chong et al.g. 1990. 1988).. 1986. which has been used by previous research in accounting literature (e. The 15 . The response scales ranged from (1) extremely below average to (5) extremely above average. Leach-Lopez et al. Kren. how they were going to achieve their goals. and the level of their responsibility.Norman. 1986. The response scales ranged from (1) always to (5) never. 4. 1986. 1992. Chenhall. 2006. Respondents were asked to indicate their level of satisfaction with their job on scales ranging from (1) very dissatisfied to (5) very satisfied. 1982.. 2006.. 2003. Performance was assessed using the self-assessment scale originally developed by Mahoney et al. Brownell. Jermias & Setiawan. and available alternatives (Baizer et al.. 1982. Job satisfaction is defined as the feelings workers have about their job or job experiences in relation to previous experiences. Murray. 2001). which has been adapted by previous accounting studies (e. (1967). Fischer. 2008). Brownell.g. Respondents were asked to indicate their level of achievement on one measure of overall performance and eight measures of specific performance dimensions. Parker & Kyj. Brownell & Hirst. The six constructs and their inter-item reliability are shown in Table 1. The degree of job satisfaction was assessed using an instrument developed by Weiss et al. Respondents were asked about their clarity regarding their role in terms of what was expected from them. 2007. 2006. The performance indicators consist of nine items. (1965).

00 and a maximum of 3.670 of the variance explained). For goal commitment.594 % of the variance explained).00. the mean response is 3.714 with a minimum of 1. role ambiguity has one factor (50. Participative budgeting has an average of 3. we use Varimax with Kaiser Normalization rotation method.250 and a maximum of 4.801 and a maximum of 0. In terms of performance. These results confirm that the questionnaires used in this study can be categorized according to the proposed construct.00.00 and a maximum of 5. job satisfaction has one factor (44.804 with a minimum of 1. 3.030 of the variance explained). with a minimum of 0. information asymmetry has one factor (58.554 % of the variance explained).827 with a minimum of 1. factors with Eigen values greater than 1.00.356 with a minimum of 1. [Insert Table 2 here] Descriptive statistics and correlations Table 3 presents the descriptive statistics of the variables used in this study. 3 To obtain a clear pattern of loadings. 1967). participative budgeting has one factor (73.210 and a maximum of 5.924 [Insert Table 1 here] We perform a principal component factor analysis to investigate whether the multi-item questionnaire has dimensions that are consistent with the proposed construct in this study. the mean response was 3. 16 . the mean response is 4. For job satisfaction. In applying this procedure.results indicate that the reliability of the constructs is within the acceptable range (Nunnally.00 and a maximum of 5.00 and a maximum of 5.263 of the variance explained).670.00. For role ambiguity.880.129 with a minimum of 1.650 of the variance explained).00 were retained. and performance has one factor (51. As shown in Table 2. The mean response for information asymmetry is 3. the mean response is 1. goal commitment has one factor (75.819 with a minimum of 1.

The structural model appeared to be a reasonable fit for our study (i.901. (2007) argue that this approach is superior to the multiple regression method because of its ability to capture the subtleties of a phenomenon wherein the correlation between the independent variables and the dependent variable is mediated by one or more intervening variables. Bentler & 4 17 . IFI = 0. IFI = 0.05 for performance as the dependent variable and X2/df = 1.48.53. (1977) suggest that the chi-squared divided by degree-of-freedom (X2/df) should be lower than 3. Tables 5 and 6 present the coefficients of the structural model with job satisfaction and performance as the respective dependent variables. The results indicate that participative budgeting is positive and significantly correlated with goal commitment. Leach-Lopez et al. Wheaton et al.[Insert Table 3 here] Table 4 presents the Pearson correlations for all the variables used in this study. These results provide early support for the hypotheses developed for this study. The two outcome variables are positive and significantly correlated.918. X2/df = 1.. Goal commitment is significantly and positively correlated with both job satisfaction and performance. but negatively and significantly correlated with role ambiguity.917.10. Researchers have provided some guidelines in assessing the potential biases inherent in various measures when using the structural equation modeling approach.e. CFI = 0. while Steiger (1990) contends that the residual mean square approximation (RMSEA) should be less than 0. [Insert Table 4 here] Hypothesis testing We use the structural equation modeling approach to examine the hypotheses presented in section two. CFI = 0. RMSEA = 0.00. RMSEA = 0. Role ambiguity is negative and significantly correlated with both job satisfaction and performance.903. but negatively and significantly correlated with role ambiguity.05 for job satisfaction as the dependent variable)4.

p < 0.709. The results indicate that: 1) Path B (budgetary participation performance) is positive but not significant (β= 0. and Path F (role ambiguity 0.001) Panel B of Table 6 presents the non-hypothesized path coefficients using performance as the dependent variable. t = 0. p < 0. 2) Path C (budgetary participation significant (β= 0.001).323. performance) is negative and significant (β= -0.400. p < goal commitment) is positive and role 0.05). t = 5.400.369).258. 18 . Bonnet (1980) indicate that the comparative fit index (CFI) and the Bollen’s fit index (IFI) should be greater than 0.90. p < 0.246.028. t = -3.157. Panel B of Table 5 presents the non-hypothesized path coefficients using job satisfaction as the dependent variable.001).05). t = 1.184.001).134.334. p < 0. Path E (goal commitment job satisfaction) is positive but not significant (β= 0. This result does not support Hypothesis H1.247. t = -3.654. p < 0.05). Panel A of both Table 5 and Table 6 indicate that the path coefficient between information asymmetry and budgetary participation (Path A) is positive but not significant. t = -4.228. p = goal commitment) is positive and role 0. t = 1.Hypothesis H1 predicts that information asymmetry will be positively associated with budgetary participation.334. Path E (goal commitment performance) is positive and significant (β= 0.240). t = 0.059. t = 5. t = - and Path F (role ambiguity 2. Path D (budgetary participation ambiguity is negative and significant (β= -0. p < 0.258. The results indicate that: 1) Path B (budgetary participation job satisfaction) is positive and significant (β= 0. p = job satisfaction) is negative and significant (β= - 0.246. Path D (budgetary participation ambiguity) is negative and significant (β= -0.001). p < 0.810. 2) Path C (budgetary participation significant (β= 0.323.

They indicate that the indirect effect of budgetary participation on job satisfaction running through goal commitment (path budgetary participation commitment goal job satisfaction) is positive but not statistically significant (β= 0. The results indicate that goal commitment mediates the relationship between budgetary participation and performance (path budgetary participation commitment goal performance). This result does not support hypothesis H2a.Hypothesis H2a expects that goal commitment will mediate the relationship between budgetary participation and job satisfaction such that budgetary participation increases goal commitment. which is positive and statistically significant (β= 0.063. Panel C of Table 6 presents the results of this procedure. The results of this test are presented in Panel C of table 5. 19 . which in turn leads to higher job satisfaction. p = 0.453)5. The Z-score is calculated using the following formula suggested by Preacher et al. This result supports hypothesis H2b. Hypothesis H3a anticipates that role ambiguity will mediate the relationship between budgetary participation and job satisfaction such that budgetary participation decreases role ambiguity. leading to higher job satisfaction.093. To test this hypothesis. Hypothesis H2b expects that goal commitment will mediate the relationship between budgetary participation and performance such that budgetary participation increases goal commitment. where a and b are the standardized path coefficients of path a and path b respectively. (2007) and Sobel (1982): Z= ab b s a + a 2 sb 2 2 2 . sa and sb are the standard error of a and b respectively. we 5 The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each path involved. z = 2.05). leading to higher performance. z = 0.024.754. To test this hypothesis we calculate the indirect relationship between budgetary participation and job satisfaction running through goal commitment. we calculate the indirect relationship between budgetary participation and performance running through goal commitment. p < 0. To test this hypothesis.

Panel C of Table 6 shows the results of this procedure.374.calculate the indirect relationship between budgetary participation and job satisfaction running through role ambiguity. 20 . we calculate the indirect relationship between budgetary participation and performance running through role ambiguity. Panel C of Table 5 shows the results of this procedure.086. β= 0. which is positive and statistically significant (β= 0.01). This result supports hypothesis H3b. and Implications for Future Research Budgetary participation and its impact on job satisfaction and performance has been the subject of extensive research in management and accounting literature. The results indicate that role ambiguity mediates the relationship between budgetary participation and performance (path budgetary participation role ambiguity performance). To test this hypothesis. 1993). [Insert Table 5 here] [Insert Table 6 here] 5. This result supports hypothesis H3a. Hypothesis H3b anticipates that role ambiguity will mediate the relationship between budgetary participation and performance such that budgetary participation decreases role ambiguity. The results indicate that role ambiguity mediates the relationship between budgetary participation and job satisfaction (path budgetary participation role ambiguity job satisfaction).047. leading to higher performance.096. z = 3. This may in part be due to the incomplete model which the previous studies have employed (Shields & Young. Discussions. Despite this volume. Limitations. p < 0. which is positive and statistically significant. p < 0.05). z = 2. the empirical findings of this body of research have been inconclusive.

Overall. These results suggest that the main benefits of budgetary participation are an increase in managers’ commitment to their goals and a decrease in role ambiguity. these results suggest that increased goal commitment causes managers to work harder. However. they will perform better. the results indicate that goal commitment mediates the relationship between budgetary participation and performance. leading to better performance. Furthermore. The significant indirect effect of budgetary participation on job satisfaction and performance running through role ambiguity is consistent with the result reported by Chenhall and Brownell (1988). as well as the relationship between budgetary participation and performance. It is interesting to note that our results indicate that the direct effect of budgetary participation on performance is not significant when goal commitment and role ambiguity are mediating variables – but the indirect effects of budgetary participation on performance running through goal commitment and role ambiguity are positive and significant. However. 21 .Following Shields & Young’s (1993) suggestion. increased goal commitment does not necessarily make managers more satisfied with their job. we use a comprehensive model to investigate the impacts of budgetary participation on job satisfaction and performance by including an antecedent variable (information asymmetry) and two mediating variables (goal commitment and role ambiguity). In other words. when managers are committed to their goals and have a clear understanding of the role they are expected to perform. the mediating effect of goal commitment on the relationship between budgetary participation and performance is not statistically significant. The study’s key findings are that goal commitment and role ambiguity mediate the relationship between budgetary participation and job satisfaction.

In spite of the limitations mentioned above. In addition. It will help the latter to realize that budgetary participation alone does not improve job satisfaction and performance. Semi-private companies tend to be significantly influenced by governments in terms of budget formulation and implementation. The social and environmental characteristics of our research setting might therefore be different from other settings. Kren (1992). Future research might examine the robustness of our model by using publicly available data Second. argues that even if respondents provide responses that appear to be more positive than those generated by more objective measurements. we use a questionnaire survey to collect data from our respondents. the use of questionnaire survey enables us to explore a rich amount of data that is not typically available in the public domain. Rather. This setting. This might be the reason why we did not find a significant relationship between information asymmetry and budgetary participation and why budgetary participation has an indirect effect on job satisfaction running through goal commitment. First. this study was conducted among managers of semi-private companies in a developing country (Turkey). it is the increased commitment and decreased role 22 . We acknowledge that responses to questionnaire survey might be biased toward socially desirable responses. this study will be beneficial for companies in general and for organizations in developing countries in particular. provide us with useful insights with regard to the impact of budgetary participation on job satisfaction and performance in a more controlled environment. however. however.The results of this study should be interpreted in light of two limitations. there is no reason to believe that their bias would systematically affect the relationship between the independent and dependent variables.

23 .ambiguity which results from managers’ participation in the budgetary process that improves job satisfaction and performance.

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Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.924 0. (1965). Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983).878 0.Table 1 Inter-item construct reliability Constructs Information Asymmetry Participative Budgeting Goal Commitment Role Ambiguity Job Satisfaction Performance Cronbach Alpha 0.851 Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993). (1970). Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960). Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al.835 0.858 0. (1967). and Performance is measured using the nine-item scale developed by Mahoney et al.801 0. 32 .

267 75. Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983). control systems and performance Factor Eigen value Percent of variance explained Information Asymmetry 3. and Performance is measured using the nine-item scale developed by Mahoney et al.947 73. Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al.594 Participative Budgeting 2. 33 . Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.030 Performance 4.366 44.Table 2 Results of factor analyses on strategy.101 51. (1970).670 Goal Commitment 2. Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960).039 50. (1965).263 Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993). (1967).516 58.554 Role Ambiguity 3.650 Job Satisfaction 8.

Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960).001) 1 -0.237*** (0.071 (0.358*** (0.000) 0.018) 0.001) 1 0.01 respectively based on two-tailed tests.083) Participative Budgeting Goal Commitment Role Ambiguity Job Satisfaction Performance 1 0.000) -0.291*** (0. Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983).000) 0.246*** (0.000) 1 Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993).125* (0. (1965). and *** denote the significant level of 0.Table 3: Pearson Correlations among Variables (n=194) (P-values in Parenthesis) Variable Information Asymmetry Participative Budgeting Goal Commitment Role Ambiguity Job Satisfaction Performance Information Asymmetry 1 0.324) -0. . (1970).05 and 0.001) 0. (1967).228*** (0. Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al.446*** (0.604) 0.229 (0. 34 .410*** (0.205) -0.135 (0.10. and Performance is measured using the nine-item scale developed by Mahoney et al. Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.**.282*** (0.000) 1 -0. 0. *.001) 0.000) -0.091 (0.037 (0.170** (0.

356 3.000 1.714 4.250 Maximum 5.000 3.000 5. Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al.000 0. (1967).602 0.129 1. (1970).804 3.Variable Information Asymmetry Participative Budgeting Goal Commitment Role Ambiguity Job Satisfaction Performance Mean 3. (1965). 35 .000 4. Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983).524 0.670 5. Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960).880 Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993).670 1.576 1.195 1.000 5.819 3.672 0.210 1.827 Table 4: Descriptive Statistics Standard Deviation Minimum 0. and Performance is measured using the nine-item scale developed by Mahoney et al. Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.970 0.000 1.

Table 5 Structural Model Path Coefficients with Job Satisfaction as the Dependent Variable Path Standardized Path t-value (p-value) Coefficient Panel A: H1: Direct effect: Path A: Information Asymmetry 0. 36 .118 Budgetary Participation (ns) Panel B: Non-hypothesized path Path B: Budgetary Participation Job Satisfaction Path C: Budgetary Participation Goal Commitment Path D: Budgetary Participation Role Ambiguity Path E: Goal Commitment Job Satisfaction Path F: Role Ambiguity Job Satisfaction Path Panel C: H2a: Mediating effect Budgetary Participation Goal Commitment Job Satisfaction H3a: Mediating effect Budgetary Participation Role Ambiguity Job Satisfaction 0. Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983). where a and b are the standardized path coefficients of path a and path b respectively.298 (0.120 (ns) 3.037 1. **.079) -3. (1970).091 (ns) 5.756 (<0. Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960). and Performance is measured using the nine-item scale developed by Mahoney et al. Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.417 (0.231 (<0. RMSEA = 0.105.096*** Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993). (1982): Z= ab b s a + a sb 2 2 2 2 .001) Z-value (p-value)2) 0.001) 0.228*** 0.422*** Standardized Path Coefficient1) 0. GFI = 0. (1965).001) -2.947. and *** denote significant levels based on one-sided tests. (1967).001) 1. *.383*** -0.097* -0. Fit indices: X2/df = 3. Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al. NFI = 0.094 1.941. (2007) and Sobel.569 (<0. 1) The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each path involved 2) The Z-score is calculated using the following formula suggested by Preacher et al.178.117 1. sa and sb are the standard error of a and b respectively.

and *** denote significant levels based on one-sided tests.068*** 5.097 t-value (p-value) 1.228*** 0.044 0.05) 0. (1982): Z= ab b 2 s a + a 2 sb 2 2 .305 (<0. (2007) and Sobel. 3) The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each path involved 4) The Z-score is calculated using the following formula suggested by Preacher et al. Job Satisfaction is measured by the sum of the twenty-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.043** Information Asymmetry is measured as the sum of the six-item scale developed by Dunk (1993).018) Z-value (p-value)2) 0.944.001) -1.189** Standardized Path Coefficient1) 0. 37 . where a and b are the standardized path coefficients of path a and path b respectively.478 (ns) 5.178** -0. Participative Budgeting is measured as the sum of the four-item scale developed by Vroom & Mann (1960). sa and sb are the standard error of a and b respectively.424 (<0.021) -2. (1967). (1970).389 (<0.383*** -0. (1965). NFI = 0. and Performance is measured using the nine-item scale developed by Mahoney et al. *.Table 6 Structural Model Path Coefficients with Performance as the Dependent Variable Path Panel A: H1: Direct effect Path A: Information Asymmetry Budgetary Participation Panel B: Non-hypothesized path Path B: Budgetary Participation Performance Path C: Budgetary Participation Goal Commitment Path D: Budgetary Participation Role Ambiguity Path E: Goal Commitment Performance Path F: Role Ambiguity Performance Path Panel C: H2b: Mediating effect Budgetary Participation Goal Commitment Performance H3b: Mediating effect Budgetary Participation Role Ambiguity Performance Standardized Path Coefficient 0. GFI = 0.970 (0.753.173. Role Ambiguity is measured as the sum of the six-item scale developed by Rizzo et al. **. Fit indices: X2/df = 3.249 (0. Goal Commitment is measured by the sum of the three-item scale developed by Latham & Steele (1983). RMSEA = 0.001) 2.000) -2.157 (ns) 0.171 (0.963.

Mediating.Figure 1: A Framework Linking Budgetary Participation to Its Antecedents. and Outcome Variables Antecedent Variable Budgetary Participation Mediating Variable Outcome Variable Goal Commitment C Information Asymmetry Participative Budgeting E Job Satisfaction/ Performance A B F D Role Ambiguity 38 .

091) B Job Satisfaction 0.231) C Information Asymmetry 0.228*** (-2.117 (1.756) 39 .Figure 2: Structural Path Coefficients of Linking Budgetary Participation to Information Asymmetry.094 (1. Role Ambiguity and Job Satisfaction Antecedent Antecedent Variable Variable Budgetary Participation Mediating Variable Outcome Variable Goal Commitment 0. Goal Commitment.422*** (3.383*** (5.417) D Role Ambiguity -0.118) A Participative Budgeting F -0.298) E 0.097 (1.

383*** (5.970) E 0.249) C Information Asymmetry 0.157) A Participative Budgeting F -0.424) D Role Ambiguity -0.Figure 3: Structural Path Coefficients of Linking Budgetary Participation to Information Asymmetry.097 (1.178** (1. Goal Commitment.171) 40 . Role Ambiguity and Performance Antecedent Variable Budgetary Participation Mediating Variable Outcome Variable Goal Commitment 0.228*** (-2.189** (-2.478) B Performance 0.044 (0.

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