Corporate hierarchy and goal attainability

Article Abstract:

Corporations develop the performance goal for a unit by integrating the goals of its subunits. However, they may encounter difficulties in combining the budget performance goals of lower-level subunits to give rise to a higher-level consolidated budget performance goal. Based on an analysis, the achievement of the consolidated goal significantly deviates from the achievement of the subunit goals. In particular, if the subunit goals are uniformly hard to fulfill, the consolidated goal will likely be harder to attain. Similarly, if the subunit goals are all easy to achieve, the attainment of the overall goal will tend to be easier. It was also shown that the correlation of the performances of the subunits has an effect on the realization of the consolidated goal. The gap between the attainability of the consolidated goal and that of the subunit goals closes as the correlation of the performances of the subunits increases.

Goal setting, Organization

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The effect of budget emphasis and information asymmetry on the relation between budgetary participation and slack

Article Abstract:

A budgetary slack is the explicit inclusion of budget amounts that facilitates an easier attainment. It is shown that the relation between the participation of subordinate managers in the budget-setting process and budgetary slack is dependent on the budget emphasis of superiors in their assessment of subordinates' performance, and the level of information assymetry between superiors and their subordinates. Results prove the importance of participative budgeting and disspell the assumption that high participation may result in greater slack when the other two predictors are great. While participation may encourage subordinates to introduce budgetary slacks, finding show that participation alone may not be adequate. The study also implies that the reduction of slack may be possible through participation, unless when there is a low budget emphasis.

Models

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Budgetary participation and managerial performance: the impact of information and environmental volatility

Article Abstract:

The role of job-relevant information (JRI) as a mediator between budgetary participation and individual performance was examined. Data for the study were obtained from 80 profit center managers from 63 Fortune 500 manufacturing companies. These managers were asked to complete a questionnaire measuring the self-reported variables of budget participation, JRI and performance. Results of the study confirmed the proposition that the acquisition of JRI by managers is facilitated by their participation in budget planning and that JRI, in turn, affects performance. Findings further showed that this effect of budget participation on performance is enduring and is more evident when the volatility of a company's external environment is high.

Research, Planning, Surveys, Executives, Participatory management

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