International journal of Contemporary Business Studies

International Journal of Contemporary Business Studies
Vol: 3, No: 6. June, 2012 ISSN 2156-7506
Available online at http://www.akpinsight.webs.com
factors and achieve competitive advantage (Mia & Clarke, 1999).Similarly, Shields & Shields
(1998) find that in situations of low competitiveness, decisions become more routine. In these
circumstances, the decisions of leaders themselves as the obvious solutions and considered
wasteful of time. Therefore, these managers are less satisfied in their mission if they become
involved in the preparation of budgets. Therefore, one can conclude that under conditions of low
competitiveness, managers will be less incentive to participate in the process of preparing the
budget (Powell, 1992).
It is possible that a high level of participation is inconsistent with the organizational structure and
business environment; this is due to a low level of performance (due to wasted time and effort of
managers) and dissatisfaction at work. In another side, if the intensity of competitiveness is
strong, managers may need additional information relevant to the complexities of the external
market environment (Brownell, 1983; Kren, 1992; Tsui, 2001). The works of Kren (1992) and
Chong & Chong (2002b) show that budgetary participation provides a convenient opportunity
for leaders to gather relevant information to make informed decisions. Thus we assume that a
high level of competitive market, managers participating in the budget process, seeking more
information. This opportunity allows them to increase their satisfaction because their
participation is a tool to express their values (Shields & Shields, 1998, p. 59).
Hence, the first hypothesis could be formulated as follows:
Hypothesis 1: The direct effect of budgetary participation on organizational performance is low.
Both assumptions are made and are based on a literature review using the budgetary participation
as an independent variable, taking a comprehensive approach to this variable (dimensional scale
of the variable budgetary participation). However, in seeking to identify the true extent of
participation that influences organizational performance in the presence of competitive
conditions (high or low), we adopt a more dimensional approach to the budgetary participation
(Hassel & Cunningham, 1993, 1996; Chong & al., 2005).The dimension "involvement" of
budgetary participation is defined as the extent of information exchanged between managers
regarding the factors affecting their budget. While the dimension "influence" means the level of
influence on manager for the determination of his budget (Hassel & Cunningham, 1993, 1996).
Given the bi-dimensionality of the budgetary participation, we make the following assumptions:
Hypothesis 2: There is a positive relationship between the dimension "involvement" of budgetary
participation and organizational performance when there is a high level of competitiveness.
Hypothesis 3: There is a positive relationship between the dimension "influence" of budgetary
participation and organizational performance of the company when there is a high level of
competitiveness.
3. RESEARCH METHODOLOGY
3.1. Data collection and sample characteristics
This study employed a questionnaire survey method to collect data. A sample was composed
from 89 top managers from companies in the industrial sector.The administration of the survey
questionnaire consisted of the following steps. First, a questionnaire with a cover letter
explaining the objective of the study and a reply paid self-addressed envelope were mailed to
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