The contingent roles of perceived budget fairness, budget goal commitment and vertical information sharing in driving work performance

Nguyen Phong Nguyen,Tai Anh Kieu,Felicitas Evangelista

doi:10.1108/jabes-06-2018-0026

Abstract

PurposeDrawing on equity theory, social exchange theory and goal setting theory, the purpose of this paper is to investigate the contingencies on the link between employees’ budgetary participation and their work performance. Specifically, this study addresses the research questions: whether vertical information sharing and budget goal commitment mediate the relationship between employees’ budgetary participation and their work performance; and whether employees’ perceived budget fairness can strengthen the positive effects of budgetary participation on vertical information sharing and budget goal commitment.Design/methodology/approachSurvey data were collected from a sample of 556 low to middle level managers of business organizations in Vietnam. The research model and its hypotheses were tested using PLS-SEM. The standardized root mean squared residual value of the composite model was employed to assess model fit. Common method bias was also checked using the marker-variable approach.FindingsThis study has two key findings: both vertical information sharing and budget goal commitment partially mediate the positive effects of budgetary participation on work performance; and both dimensions of perceived budget fairness (distributive and procedural) elevate the positive relationships of budgetary participation – vertical information sharing and budgetary participation – budget goal commitment.Practical implicationsThe findings could benefit businesses in Vietnam and similar market contexts. Specifically, top management needs to select a proper level of budgetary participation that can facilitate information sharing vertically within the organization and motivate their employees to be more committed to achieve budget goals. Besides, the top management also needs to ensure that their employees perceive the fairness in the budgeting process.Originality/valueThe study contributes a greater understanding as regards the mediating roles of vertical information sharing and budget goal commitment as well as the moderating role of perceived budget fairness on the relationship between employees’ participation in the budgetary process and their work performance, especially in the context of an emerging market – Vietnam. Overall, this study contributes to the management and accounting literature with insights concerning a more complex process explaining employees’ work performance and triggered by their budgetary participation.

Highlights

Over the past three decades, researchers have extensively examined whether employees’ involvement in and influence on their budgeting targets make them work more effectively
This study argues that employees’ perceived budget fairness may elevate the positive effects of budgetary participation on vertical information sharing and budget goal commitment
In this regard, using equity theory and social exchange theory – where organizational justice theory is traced to – as empirical guide (Adams, 1965; Blau, 1964; Greenberg, 1987), this study proposes that the interaction between employees’ budgetary participation and their perceived budget fairness relates to enhanced work performance through enhanced vertical information sharing and budget goal commitment

Summary

Introduction

Over the past three decades, researchers have extensively examined whether employees’ involvement in and influence on their budgeting targets make them work more effectively. This study research contributes to the accounting and management literature by providing insights of the roles of budgetary participation as well as contingency factors such as information sharing, budget goal commitment and perceived budget fairness in inducing employee’s work performance, with evidence from the context of an emerging market – Vietnam. Mediation and moderation are not mutually exclusive, or in other words, the consideration of an intervening variable as a mediator does not mean that variable can never be examined as a moderator, provided that there is no multicollinearity issue ( Jose, 2013) In light of these above reasoning, this study hypothesizes that when employees perceive a higher level of budget fairness, the positive influences of budgetary participation on vertical information sharing and budget goal commitment can be strengthened. The informants worked in sales and marketing (43.2 percent), research and development (16.4 percent), manufacturing (16.7 percent), finance/accounting (12.1 percent), Demographics

Trading

Budgeting procedures are applied consistently across time

Findings

Work performance