Cultural Effects of Budgetary Participation: Indonesian Evidence

Abstract

Research into the impact of the interaction between budgetary participation and budget emphasis on managerial performance and job related attitudes has failed to provide consistent results. Researchers are in general agreement that aspects of national culture, affecting the behaviour and attitudes of individuals within organisations, have to be taken into account. Motivated by the encouraging findings of Harrison's (1992) study in Singapore, this study is a partial replication of Harrison (1992, 1993) in the context of Indonesia. It explores further whether a high budget emphasis is an effective superior evaluative style in nations categorised as high power‐distance (PD) and low individualism. Specifically it examines the effect of participation on the budget emphasis in a superior's evaluative style and dependent variables: job satisfaction and managerial performance. In addition to the structured instruments used in prior research, open ended questions captured attitudes to management control issues. The results indicate that in Indonesia a low budget emphasis improves managerial performance, while high participation increases Indonesian managers' job satisfaction. This result does not wholly support previous research findings and leads to discussion of Indonesian national characteristics which potentially contribute to the impact of a superior's evaluative style in Indonesia. This research suggests that the same performance evaluative style is unequally effective across the nations common to Hofstede's cultural dimensions.