Accounting Organizations andSocietv, Vol. 14, No. 4, pp. 347-357, 1989. 0361-368~89 $3.00+.

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Printed in Great Britain Pergamon Press plc

THE IMPACT OF PARTICIPATION IN BUDGETING AND JOB DIFFICULTY ON

MANAGERIAL PERFORMANCE AND W O R K MOTIVATION: A RESEARCH NOTE*

LOKMAN MIA
University o f Tasmania

Abstract

This study examined the interactive effect of participation and job difficulty on managerial performance
and work motivation in a budgetary context. Usingmiddle-level managers from six companies working in
various functional areas as subjects, this study found that managerial performance was high where
perceived participation was commensurate with perceived level of job difficulty. On the other hand,
performance was low where participation was not commensurate with the perceived level of job difficulty.
No significant interactions were obtained with respect to work motivation.

The a r g u m e n t that participation in b u d g e t i n g Nevertheless, there is only equivocal evi-

may be positively related to managerial perform-
ance and m o t i v a t i o n is based o n the rationale
that w h e n a goal or a standard set by a participa-
tive process is accepted, employees: ( a )
internalize the established goal or standard; and
( b ) feel a personal responsibility to achieve it
(Milani, 1972). C o n s e q u e n t l y , e m p l o y e e s de-
velop greater m o t i v a t i o n and h e n c e attain b e t t e r
performance. Researchers also argue that par-
ticipation may increase e m p l o y e e s ' personal
feelings of "ownership" of the goal or standard
and the level of their trust in the i n t e n t i o n s of
m a n a g e m e n t (Vroom, 1964; Lowin, 1968;
Patchen, 1970; Lawler & Hackman, 1979; Raval,
1982 ). Others have argued that participation is a
m e c h a n i s m for i n f o r m a t i o n e x c h a n g e by w h i c h
individual e m p l o y e e s o b t a i n m o r e i n f o r m a t i o n
about their job ( H o p w o o d , 1976). Such addi-
tional i n f o r m a t i o n facilitates a clearer under-
standing of their job, t h e r e b y i m p r o v i n g motiva-
tion and p e r f o r m a n c e (.Mitchell, 1973; Schuler
& Kim, 1976; Schuler, 1980).
d e n c e s u p p o r t i n g the posited relationships
b e t w e e n p a r t i c i p a t i o n and p e r f o r m a n c e and
motivation. While a n u m b e r of studies r e p o r t a
significant positive relationship b e t w e e n partici-
p a t i o n and p e r f o r m a n c e in a b u d g e t a r y c o n t e x t
(Argyris, 1952; Becker & Green, 1962; Brow-
nell, 1979; Kenis, 1979), o t h e r studies did not
o b s e r v e s u c h a relationship ( F r e n c h etal., 1960;
Fleishman, 1965; Milani, 1975; Ivancevich,
1976; Steers, 1976). Moreover, s o m e studies
have r e p o r t e d a negative relationship b e t w e e n
the two (Bryan & Locke, 1967; Stedry, 1960).
Similarly, equivocal results have b e e n o b t a i n e d
with respect to the posited p a r t i c i p a t i o n - m o t i -
vation relationship in a b u d g e t a r y context.
While Vroom ( 1 9 6 4 ) and Hofstede ( 1 9 6 7 ) , for
example, r e p o r t e d a significant positive relation-
ship b e t w e e n participation in b u d g e t i n g and
motivation, Brownell & M c I n n e s ( 1 9 8 6 ) did not
o b s e r v e s u c h a relationship (see also Staw, 1977;
Ivancevich, 1979).
O n e possible reason for the equivocal results

*I am indebted to Peter Brownell,MacquarieUniversity,Ken Ferris,Southern Methodist Universityand Ron Weber and Peter
Ziegler, Queensland Universityfor their comments on an earlier version of the paper. Comments by participants in seminars
on the paper at Universityof Otago, Universityof New South Wales and at Canterbury Universityare appreciated. I am also
indebted to the anonymous reviewers for their useful comments and suggestions on earlier drafts of the paper.
347
348 LOK3,1AN MIA
reported in previous studies is that the relation-
ships may be moderated by contingency (situa-
tional) variables (see Brownell, 1981). Hop-
w o o d (1976), for example, suggests that the
moderating role of contingency variables, such
as job characteristics, personality characteristics
and social conditions, be considered while
studying participation in budgeting. A review of
the literature reveals that a n u m b e r of studies
have investigated the relationship between
budgetary participation and employee
behaviour while considering the contingent role
of personality variables. Brownell (1981), for
example, reported that locus of control (a per-
sonality variable) moderated the relationship
between job satisfaction, performance and
budgetary participation. Previously, Vroom
( 1 9 5 9 ) and Hofstede ( 1 9 6 7 ) reported that per-
sonality variables such as authoritarianism and
need for independence moderated the relation-
ship b e t w e e n motivation, performance and par-
ticipation in decision-making.
No studies, however, have addressed the
possible moderating role of a job characteristic
such as job difficulty on the relationship be-
tween budgetary participation and employee
behaviour, particularly at the individual level
(i.e. using individual employees as the unit of
analysis). This study, conducted in a field setting,
investigates such a moderating role by examin-
ing h o w job difficulty interacts with participa-
tion to influence managerial performance and
motivation.
The remainder of~this section discusses the
moderating effects of job difficulty and develops
the hypotheses to be tested. Subsequent sec-
tions focus on the method of the study, the
results and a discussion of the results, limitations
and conclusions.
JOB DIFFICULTY AS A MODERATING
VARIABLE
Two important characteristics of a job or task
(henceforth, job) are its di/liculty and variability
(Van de Ven & Delbecq, 1974). A job may be
difficult because of its complexity,
heterogeneity, unpredictability, lack of a pre-
scribed performance p r o c e d u r e or because of its
changing operational technology (Perrow,
1967). A job may also be difficult because of its
variability. Indeed, Van de Ven & Delbecq
( 1 9 7 4 ) argue that when a job b e c o m e s less dif-
ficult as a result of learning, it is likely to b e c o m e
less variable because a body of knowledge may
have been developed specifying a prescribed
way to perform it. Routineness is another im-
portant characteristic of a job. A routine job may
be p r o g r a m m e d by the prescription of rules and
procedures which facilitate performance (Ait-
ken, 1960; Fullan, 1970) and, as a consequence,
the job b e c o m e s less difficult. Thus, difficulty is
an important job characteristic and it may be a
surrogate for other important job characteristics
such as variability and routineness.
A potential moderating effect of job difficulty
on the participation-performance and participa-
tion-motivation relationships appears to be sup-
ported by the extant literature. In a high job dif-
ficulty situation, m o r e information is required at
the point of task execution (Fry & Slocum,
1984). Managers operating in such a situation
may not have all the necessary information to
perform the job; they may need to obtain and
process additional information to understand
the job clearly, thereby improving their chances
of successful performance and obtaining desired
rewards.
Participation as a mechanism for information
exchange may enable managers to obtain and
process additional information about their job
( H o p w o o d , 1976; Galbraith, 1977). Such addi-
tional information may facilitate understanding
of their job requirements, thereby increasing
their confidence ( e x p e c t a n c y ) that efforts made
to perform the job may be successful. Under
expectancy theory of motivation (see Vroom,
1959; House, 1971; Lawler & Suttle, 1977;
Ferris, 1977, 1978), an increase in the expec-
tancy that effort leads to successful performance
( E - > P ) may increase managers' motivation to
perform their job. Thus, it can be argued that
participation in budgeting may improve mana-
gers' motivation and performance particularly in
a high job difficulty situation. H o p w o o d (1976,
 PARTICIPATION IN BUDGETING 3.49

pp. 83--85), for example, argues that in-the~case
of a high job difficulty situation, participation in
budgeting may offer greater benefits than a non-
participative style.
In a low job difficulty situation, on the other
hand, it is possible to develop and apply pre-
determined rules, policies and standards for the
performance of a job (Tushman & Nadler,
1978). Thus, individual employees operating
under these conditions may be able to perform
the job only by knowing the prescribed rules,
policies and standards; they may not need to
obtain and process additional information for
this purpose and, therefore, have less need for
participation. If work is routine (less difficult),
most decisions involving the task are likely to be
routine hence, managers will be more motivated
and perform better if their time is not wasted by
participation in decisions with obvious solutions
(see Strauss, 1982).
Based on the discussions above, it can be
argued that the relationships between participa-
tion and performance and between participation
and motivation are contingent upon an appro-
priate fit between participation and job diffi-
culty. A high(low) level of participation under a
high(low) job difficulty situation (the appro-
priate fit) is likely to have a more positive
(strong) relationship with managerial perform-
ance and motivation. The converse is expected
when the appropriate fit does not occur (see Fig.
1). The hypotheses stating this proposition are
as follows:
H,. The higher the perceived job difficulty(X2). the more
positive is the relationship between participation in
budgeting (X,) and managerial performance (Y). In
mathematical terms, dY/tL¥, is greater w h e n X 2 increases.
H_,. The higher the perceived job difficulty ( X z), the more
positive is the relationship between participation in
budgeting (X,) and motivation (M). In mathematical
terms, thtf/d.¥, is greater w h e n X z increases.
The hypotheses are summarised in Fig. 1.
METHODS
Research site a n d s a m p l e
Data for the study were collected using a sur-
vey questionnaire from middle-level managers
working in six companies operating in New Zea-
land. The number of people employed by each of
these companies was between 100 and 1500. Of
these six companies, one manufactures food
items, one makes furniture and w o o d products,
one assembles automobiles, two provide retail
services and one provides banking services.
Discussions in preliminary meetings with the
managements of these companies indicatedthat,
for several years, these companies have been: (a)
using comprehensive budgeting systems; and
(b) interested in encouraging a participative
style of budgeting in all departments/sections.
Moreover, it was also evident from the discus-
sions that: (i) employees needed time to under-
stand and follow various policies of the com-
pany; and (ii) an employee holding at least a
middle-level management position had
adequate opportunities to participate in setting
and implementing his or her (henceforth, his)

Job Difficulty

' High { Low

{
High More Positive Less Positive
'artici- . Relationship R¢lationshio
,ation I
Low { Less Positive More Positive
{ Rel~|ion~hip Relafionshio

Fig. I. The model of the study.

 350 LOKMANMIA

d e p a r t m e n t a l / s e c t i o n a l b u d g e t s a n d goals. T h e m e n t that an individual e m p l o y e e p e r c e i v e s he

two criteria for s e l e c t i n g p a r t i c i p a n t s were:
( 1 ) the individual had b e e n w o r k i n g for the
c o m p a n y for at least six m o n t h s prior to the
study; and
( 2 ) the individual was h o l d i n g a m a n a g e m e n t
p o s i t i o n a n d was r e s p o n s i b l e for p r e p a r i n g and/
or i m p l e m e n t i n g the b u d g e t o r target for his
department/section.
T h e m a n a g e m e n t s of the six c o m p a n i e s pro-
vided 93 p a r t i c i p a n t s from a m o n g the m a n a g e r s
w h o w e r e available at the time of the study and
w h o m e t the two s e l e c t i o n criteria.t
Each p a r t i c i p a n t was sent a q u e s t i o n n a i r e
t o g e t h e r with a letter e x p l a i n i n g the o b j e c t i v e of
the s t u d y a n d assuring a n o n y m i t y of his
responses. Each p a r t i c i p a n t was p r o v i d e d with a
self-addressed p r e p a i d e n v e l o p e to r e t u r n the
q u e s t i o n n a i r e d i r e c t l y to the researcher.
Of the 93 m a n a g e r s s e l e c t e d for the study, 76
fully c o m p l e t e d and r e t u r n e d the q u e s t i o n n a i r e
yielding a r e s p o n s e rate of 81.7%. These mana-
gers w e r e from p r o d u c t i o n ( 2 0 % ) , sales ( 16°4 ),
m a r k e t i n g ( 6 % ) , a c c o u n t i n g ( 18% ), i m p o r t a n d
p u r c h a s i n g ( 1396 ), f i n a n c i n g ( 10% ), p e r s o n n e l
( 10% ) and MIS ( 7 % ) . O n average, the respon-
d e n t s had b e e n e m p l o y e d for five a n d a half years
by their r e s p e c t i v e c o m p a n i e s a n d supervised,
o n average, 13 s u b o r d i n a t e s .
Measurement of variables
T h e q u e s t i o n n a i r e o b t a i n e d m e a s u r e s for
three variables: p a r t i c i p a t i o n in b u d g e t i n g , job
difficulty and w o r k motivation.
Participation in budgeting. Participation
refers to the a m o u n t of i n f l u e n c e and involve-
or she has o n a jointly-set b u d g e t (Milani, 1975;
Brownell, 1979). Milani's p a r t i c i p a t i o n con-
t i n u u m scale was used to assess the e m p l o y e e ' s
p e r c e i v e d a m o u n t of p a r t i c i p a t i o n in budgeting.
Since Milani's m e a s u r e has b e e n widely used, the
results of this s t u d y can b e i n t e g r a t e d into the
existing b o d y of literature ( B r o w n e l l , 1982).
Examples of items i n c l u d e d in Milani's scale are:
"Which category b e l o w best describes y o u r
activity w h e n the b u d g e t is b e i n g set? I am
i n v o l v e d in setting:" and " H o w m u c h i n f l u e n c e
do you feel you have o n the final budget?". T h e
m a n a g e r s rated their level of p e r c e i v e d partici-
p a t i o n in b u d g e t i n g u n d e r each of the 6 items on
a 7 - p o i n t Likert-type scale a n c h o r e d at both
ends. A m a n a g e r ' s overall s c o r e for participation
was the s u m of scores for the 6 items. A c h e c k of
i n t e r n a l reliability y i e l d e d a C r o n b a c h ( 1 9 5 1 )
alpha coefficient of 0.91 for this scale. Moreover,
a factor analysis of the scores yielded ~)ne eigen-
value greater than unity, h e n c e , o n e factor was
e x t r a c t e d suggesting that the scale was uni-
d i m e n s i o n a l . T h e factor a c c o u n t e d for 69.9% of
the variance. Table 1 p r e s e n t s the factor load-
ings, e i g e n v a l u e and the p e r c e n t a g e of e x p l a i n e d
variance.
Job difficulty. This variable refers to the
d e g r e e of c o m p l e x i t y of the search process in
p e r f o r m i n g a job, the a m o u n t of t h i n k i n g time re-
q u i r e d to solve job-related p r o b l e m s and the
b o d y of k n o w l e d g e that p r o v i d e s guidelines for
p e r f o r m i n g the job ( P e r r o w , 1967). J o b diffi-
c u l t y was m e a s u r e d using a 7-item Likert-type
scale d e v e l o p e d by Van d e Ven & D e l b e c q
( 1 9 7 4 ) . Examples of items i n c l u d e d in this
m e a s u r e are: "To what e x t e n t is there an under-

*The company managements agreed to select the participants for the study using the two selection criteria only. This was
achieved by making the managements fully aware of the rationale for the selection criteria and the importance of using those
criteria in selecting the participants. It is believed that participants having different personality characteristics had a fair
chance to be included in the sample. Thus, the research design is expected to be randomizedforpersonaliCy characteristics.
One may also argue that since the participants had been working for their company for a fairlylong time (five and a half years
on the average), they might have become used to the particular style .of management in the company. Consequently, the
possible influence of their individual personality characteristics on the effectiveness of their participation in budgeting might
have become neutral. Since data for this study were collected from companies operating in New Zealand only, the results may
be specific to New Zealand culture.
 PARTICIPATIONIN BUDGETING 351

TABLE 1. Factor analysis of participation and job difficulty vation refers to a joint f u n c t i o n o f his o r h e r
responses e x p e c t a n c y that effort ( E ) t o w a r d s a job per-
Participation Job difficulty f o r m a n c e ( P ) will lead to the successful per-
Loadings Loadings f o r m a n c e o f the j o b (i.e. E - > P ) , his o r h er e x p e c -
Items factor I Items factor I tancy that successful p e r f o r m a n c e o f the j o b will
1 0.86 1 0.59 lead to a t t a i n m e n t o f s o m e o u t c o m e s (i.e. P->O)
2 0.73 2 0.55 and his o r h e r v a l e n c e ( V ) o r desirability o f t h o s e
3 0.71 3 0.61 o u t c o m e s (Ferris, 1977). T h e c o n s t r u c t was
4 0.90 4 0.63 m e a s u r e d using t h e scale d e v e l o p e d by Lawler &
5 0.89 5 0.72
Suttle ( 1 9 7 3 ) . Part o n e o f t h e q u e s t i o n n a i r e con-
6 0.94 6 0.65
7 0.70 sisted o f 20 e x p e c t a n c y items: 2 i t em s m e a s u r e d
( E - > P ) e x p e c t a n c i e s and 18 items m e a s u r e d (P-
Eigenvalue 4.19 Eigenvalue 2.85
> O ) e x p e c t a n c i e s . For ( E - > P ) e x p e c t a n c i e s , ef-
Variance Variance
explained 70% explained 41% fort was r e p r e s e n t e d by t h e e x p r e s s i o n " w o r k i n g
hard", for ( P - > O ) e x p e c t a n c i e s , p e r f o r m a n c e
was r e p r e s e n t e d by e x p r e s s i o n s s u c h as "high
standable s e q u e n c e o f steps that can b e f o l l o w e d p r o d u c t i v i t y " and o u t c o m e by e x p r e s s i o n s s u c h
in d o i n g y o u r work?" and " O n average, h o w as " p r o m o t i o n " . Each o f t h e e x p e c t a n c y i t em s
m u c h actual thinking time d o y o u usually s p e n d called for a r e s p o n s e o n a 7-point Likert-type
trying to s o l v e such specific difficult problems?". scale ranging f r o m n e v e r ( 1 ) to always ( 7 ) . Part
Managers rated t h e i r p e r c e i v e d level o f j o b diffi- t w o o f t h e q u e s t i o n n a i r e c o n s i s t e d o f 20 i t e m s
c u l t y o n a 7-point scale a n c h o r e d at b o t h ends. A m e a s u r i n g t h e v a l e n c e ( d e s i r a b i l i t y ) o f t h e 20
m a n a g e r ' s overall s c o r e for job difficulty was th e task o u t c o m e s . R e s p o n d e n t s rated t h ei r v a l e n c e
s u m o f his o r h er s c o r e s for the 7 items. A c h e c k o n a 9 - p o i n t Likert-type scale, r an g i n g from ex-
o f internal reliability y i e l d e d a C r o n b a c h ( 1951 ) t r e m e l y u n d e s i r a b l e ( 1 ) to e x t r e m e l y d esi r ab l e
alpha co ef f i ci en t o f 0.75 for this scale. M o r e o v e r , (9). T h e 20 o u t c o m e s i n c l u d e d b o t h intrinsic
a factor analysis o f t h e s c o r e s y i e l d e d o n e eigen- and e x t r i n s i c rewards. T h e overall s c o r e for a
value g r e a t e r than unity, h e n c e , o n e factor was m a n a g e r ' s m o t i v a t i o n was d e t e r m i n e d by multi-
e x t r a c t e d suggesting that th e m e a s u r e was uni- plicatively c o m b i n i n g his o r h e r s c o r e s u n d e r
dimensional. T h e factor a c c o u n t e d for 41% o f the e x p e c t a n c y and v a l e n c e items. 2 T h e Lawler
th e variance. Table 1 p r e s e n t s th e factor load- & Suttle's i n s t r u m e n t has b e e n s h o w n to b e reli-
ings, the eigenvalue, and t h e p e r c e n t a g e o f able, and it has b e e n w i d e l y used (Ferris, 1977).
e x p l a i n e d variance. An internal reliability c h e c k y i e l d e d C r o n b a c h
( 1 9 5 1 ) alpha c o e f f i c i e n t s o f 0.71 for the mea-
sure o f ( E - > P ) e x p e c t a n c y , 0.82 for ( P - > O ) ex-
Work motivatiorL An e m p l o y e e ' s w o r k moti- p e c t a n c y and 0.72 for v a l e n c e (V); t h ese results

ZWork motivation: M=(E->P)X[(P->OXV)] where (E->p) -- effort leads to performance expentancy, (P->O) --
performance leads to outcome expectancy and (v) = valence or desirability of outcome or reward. This study used a
between-subjects analysis of motivation scores. An alternative to this method would be a within-subjects analysis (Johnson,
1979). However, following Ferris ( 1977, 1979) and Jiambalvo (1979), a between-subjects analysis method was used here for
two reasons. First, this method is comparatively easy to use and understand. Jiambalvo ( 1979, p. 448), for example, argues
that "Research using a within-individuals analysis becomes cumbersome very quickly". Second, empirical evidence shows
that a within-subjects analysis is not superior to a between-subjects analysis. Examples of studies supporting this argument
are Parker & Dyer (1976), Kopelman (1979)and Murray & Frazier (1986)(see also Ferris, 1979). It is expected that
individual employees have a desire to obtain both intrinsic and extrinsic rewards (intrinsic and extrinsic valences) for, say,
good job performance. Consequently, treating the two valences separately in constructing motivation scores would result
in an incomplete explanation for an individual's motivation. Moreover, the relationship, if any, between employees'
participation and their extrinsic valences is not theoretically clear (see Ronen & Livingstone, 1975; Brownell & Mcinnes,
1986).
 352 LO KzMAN MIA

c o m p a r e favourably w i t h p r e v i o u s results 3 (Fer- r e q u e s t e d to a c c u r a t e l y e v a l u a t e t h e overall per-

ris, 1977). f o r m a n c e o f the m a n a g e r r e p o r t i n g d i r e c t l y to
him o r h e r using a 9 - p o i n t Likert-type scale
M a n a g e r i a l performance. P e r f o r m a n c e in r a n g i n g from ( 1 ) well b e l o w average to ( 9 ) well
this c o n t e x t refers to t h e d e g r e e o f successful a b o v e average p e r f o r m a n c e .
r o l e a c h i e v e m e n t a t t a i n e d by an e m p l o y e e Each o f the r e s p o n d e n t s u p e r i o r s was a s s u r e d
(Ferris, 1977). A l t h o u g h p r e v i o u s s t u d i e s o f o f a n o n y m i t y and i n f o r m e d that the i n f o r m a t i o n
b u d g e t p a r t i c i p a t i o n have u s e d self-ratings c o l l e c t e d w o u l d be used o n l y for t h e p u r p o s e o f
( B r o w n e l l , 1979, 1982; M e r c h a n t , 1981), t h e the study. 4 S u p e r i o r s ' ratings for 62 m a n a g e r s
c u r r e n t s t u d y u s e d s u p e r i o r s ' ratings o f p e r f o r m - w e r e o b t a i n e d , h e n c e the final s a m p l e size was
a n c e for t w o reasons. First, self-ratings are likely 62 for t h e analysis of t h e p e r f o r m a n c e data and
to have a h i g h e r l e n i e n c y e r r o r ( h i g h e r m e a n val- 76 for the m o t i v a t i o n data.
u e s ) and a l o w e r variability e r r o r ( r e s t r i c t e d
r a n g e ) in the s c o r e ( s e e Prien & Liske, 1962;
T h o r n t o n , 1968). M o r e specifically, the likeli- RESULTS
h o o d that a m a n a g e r will rate his o r h e r o w n un-
satisfactory ( b e l o w a v e r a g e ) p e r f o r m a n c e as un- T a b l e 2 p r e s e n t s d e s c r i p t i v e statistics and
satisfactory is at least l o w if n o t nil. Second, t h e Table 3 the c o r r e l a t i o n m a t r i x for the variables
s u p e r i o r s ' ratings are likely to p r o v i d e a w i d e r utilized in this study. As t h e r e is no significant
(more global) evaluation of managerial perform- m u l t i c o l l i n e a r i t y a m o n g s t the variables as
a n c e ( H e n e m a n , 1974). s h o w n in Table 3 ( s e e Nie e t a l . , 1975, p. 340),
T h e list o f p a r t i c i p a n t s p r o v i d e d b y manage- r e g r e s s i o n analysis was u s e d to test h y p o t h e s e s
m e n t o f the six c o m p a n i e s i n c l u d e d the n a m e H t and H 2 (Blalock, 1972; S c h o o n b o v e n , 1981 ).
and address of each participating manager's M o r e o v e r , the m u l t i p l i e r i n t e r a c t i o n m o d e l pre-
s u p e r i o r and t h e p e r i o d for w h i c h t h e particip- s e n t e d in e q u a t i o n ( 1 ) is elticient in testing the
ant h a d b e e n w o r k i n g u n d e r his o r h e r c u r r e n t
TABLE 2. Descriptive statistics for the variables
s u p e r i o r . At least a p e r i o d o f t h r e e m o n t h s was
c o n s i d e r e d n e c e s s a r y for a s u p e r i o r to form an Actual Theoretical
a c c u r a t e o p i n i o n a b o u t his o r h e r s u b o r d i n a t e ' s Variables Means S.D. range range
p e r f o r m a n c e . Five o f t h e 76 m a n a g e r s ( w h o fully Performance 5.15 2.82 2-9 1-9
c o m p l e t e d and r e t u r n e d t h e q u e s t i o n n a i r e ) d i d Motivation 39.06 16.90 0---90 na
n o t m e e t the a b o v e c r i t e r i o n . T h e s u p e r i o r o f Participation 29.12 8.71 9--40 6--42
e a c h o f t h e r e m a i n i n g 71 m a n a g e r s was Job difficulty 21.26 4.97 10-33 7-35

TABLE 3. Correlation matrix for the variables

Y M Xt Xz XtXz
Y Performance 1.00
M Motivation O. 10 1.00
Xt Participation O. 18 O. 16 1.00
X2 Job difficulty -0.21 • 0.01 0.02 1.00
XtXz Interaction 0.31t 0.03 -0.08 -0.23* 1.00

• p<0.05.
"l-p<0.0l.

~Since the measure of motivation involves a muhiplicative model (see note 2), a factor analysis of the responses would not
be useful.
4The superiors were also requested to evaluate performance of a participating manager only if they (superiors) could do it
without any personal prejudice. Superiors of six participating managers refused to evaluate their (manager's) performance
on personal grounds.
 PARTICIPATIONIN BUDGETING 353

hypothesized interaction effect (Khandwalla, managerial performance. Drawing the figure

1974; Allison, 1977; Brownell, 1981, 1982; involved taking the partial derivative o f equation
Schoonhoven, 1981; Govindarajan, 1986; ( 1 ) over X t and then plotting the joint effect of
Chenhall, 1986). the main and interaction terms (see Southwood,
1978; Schoonhoven, 1981; Govindarajan,
Hypothesis H t was tested using the regression
1986). Figure 2 indicates that the higher the job
model:
difficulty, the greater the positive impact o f par-
ticipation on performance (see Schoonhoven,
Y = a + b , X , + b_,X, + b ~ X , X , + e... (1) 1981, p. 364 ).
Hypothesis H 2 was tested using a model iden-
w h e r e Y is managerial performance, Xt, partici- tical to equation ( 1 ) by substituting the motiva-
pation in budgeting, X,, job dil~culty andXtX_, is
interaction.
dY Y = Performance
-- where
dX I X1 - Participation

To permit an a c c e p t a n c e o f hypothesis Ht, the

coefficient b.s in equation ( 1 ) is required to be: x.0
( a ) significant, indicating a significant interac-
tion b e t w e e n participation and job difficulty
affecting performance; and ( b ) positive to sup-
0.5
port the direction of the hypothesis.
The results presented in Table 4 reveal that
the coefficient b 3 was positive and significant (39
< 0.04). The prediction model in equation ( 1 ) 0.10
0.i 0.5
explained 13.83% o f t h e v a r i a n c e ( R 2 = 13.83% -0.x Job Difficulty(X 2)

(adjusted R" = 9.4% ), F = 3. lO,p < 0.03) in per-

formance. Therefore, the results indicate that
budgetary participation and job difficulty -0.s
interacted at a significant level to positively im-
pact managerial performance. Thus, Ht was ac-
cepted. where dY
-- = b I ÷ b3X 2
dxl

Figure 2 presents a graphical representation of

from Y - a + blX i ÷ b2X 2 + b3XiX 2 + •
the results to enable a clearer understanding of
the significant interaction b e t w e e n budgetary Fig. 2. Significant interaction between participation and job
participation and job difficulty in relation to difficulty affecting performance.

TABLE4. Test of hypothesis H,.

The interaction between participation and job difficulty affecting performance
Levelof
Variables Coefficient 7" value significance(p)
Xt Participation 0.24 1.22 ns
Xz Job difficulty - O.39 1.16 ns
XtX 2 Interaction 0.69 2.05 <0.04
Constant 6.41 39.27 <0.001
R2t= 13.83%,F(3,58)= 3.10,p<0.03.
n=62.
*One.tailed test.
tAdjusted R' = 9.4%.
354
tion (M) data for performance (P) data. The
results were not significant and, therefore, hypo-
thesis H z was rejected. ~ An implication of the
results is discussed later in the paper.
DISCUSSION, LIMITATIONS AND
CONCLUSIONS
As expected, the proposed interaction
between participation and job difficulty affect-
ing performance was significant. Performance
was found to be high when the amount of partici-
pation was proportionate to the level of job diffi-
culty. In contrast, performance was found to be
low when the amount of participation was dis-
proportionate to the level of job difficulty. Thus,
a congruence ( g o o d fit) between the level of
participation and job difficulty appeared to be a
pre-condition for effective participation (in
terms of performance).
These results support the argument that
employees may find participation useful when
they perceive their job difficulty to be high and
when their perceived level of job difficulty is
low, they may find participation relatively
ineffective. This study, therefore, offers one exp-
lanation for the equivocal results of previous
studies which reported a negative or no relation-
ship between participation and performance
(Blumenfield & Leidy, 1969; Milani, 1975; Bryan
& Locke, 1976; Kenis, 1979; Steers, 1979). The
level of participation in budgeting by respon-
dents in those studies might have been dispro-
portionate to the level of perceived job diffi-
culty. Similarly, this study offers one explanation
for the results of previous studies which re-
ported a positive relationship between partici-
pation and performance (Schuler & Kim, 1979;
Schuler, 1980; Merchant, 1981; Brownell,
1982); the level of participation in budgeting by
respondents in those studies might have been
proportionate to the level of job difficulty they
perceived.
The results for work motivation are dis-
SHypothesisH z was tested usingan alternative formulationof motivation, i.e.M = ~_[(E->O)( V)I as suggested by Ferris ( 1977,
p. 606). The results were not significant and hence, rejection of hypothesisH2was further confirmed.
LOKMANMIA
appointing but not surprising. Research results
for motivation have been equivocal. While some
studies (e.g. Patchen, 1970; Siegal and Ruh,
1973; Collins, 1978; Kenis, 1979) have reported
a significant positive relationship between par-
ticipation and motivation, other studies (e.g.
Staw, 1977; Ivancevich, 1979; Brownell, 1983)
observe no such relationship. More recently,
Brownell & Mclnnes ( 1 9 8 6 ) could not obtain a
significant positive relationship between partici-
pation and motivation. One possible explanation
for such equivocal results is the apparent lack of
a consistent approach to measuring motivation
in previous studies investigating the participa-
tion-motivation relationship (see Brownell &
Mclnnes, 1986). The approach to defining and
measuring motivation in the current study is
consistent with that taken by Brownell & Mcln-
nes (1986). Both these studies used an expec-
tancy model for defining, and the scale
developed by Lawler & Suttle ( 1 9 7 3 ) for
measuring motivation. The insignificant results
for motivation obtained in the current study are
therefore consistent with those reported by
Brownell & Mclnnes (1986). Furthermore,
based on the results of this study, it can be
argued that perceived job difficulty does not act
as a contingent variable to moderate the partici-
pation-motivation relationship. Thus, the
results of the study attempt to improve our un-
derstanding of the lack of a relationship between
participation and motivation.
With respect to the limitations of the present
study, several points are worth mentioning.
First, the managements of the six companies
selected the participants for the study and,
hence, the sample was not strictly random. Con-
sequently, some caution is necessary before
generalizing the results. Second, the regression
model of performance (equation ( 1 )) explained
a relatively low level of variance ( R 2 = 13.8% )
indicating that variables other than budgetary
participation and job difficulty are at work affect-
ing managerial performance. Future research
needs to pursue this issue further.
 PARTICIPATION IN BUDGETING 355

Notwithstanding such limitations, th~ results i n g m a n a g e r s t o p a r t i c i p a t e in b u d g e t i n g is likely

of this study might help to reconcile the results
r e p o r t e d b y p r e v i o u s s t u d i e s o f p a r t i c i p a t i o n in
budgeting. The study therefore makes some con-
tribution to improving our understanding of the
effect of budgetary context. For practising mana-
g e r s , t h e r e s u l t s s u g g e s t t h a t p a r t i c i p a t i o n in
b u d g e t i n g as a t o o l f o r i m p r o v i n g m a n a g e r i a l
p e r f o r m a n c e s h o u l d b e u s e d s e l e c t i v e l y . In c a s e s
w h e r e p e r c e i v e d j o b d i f f i c u l t y is h i g h , e n c o u r a g -
to improve their performance. On the other
h a n d , in c a s e s w h e r e p e r c e i v e d j o b d i f f i c u l t y is
l o w , e n c o u r a g i n g m a n a g e r s t o p a r t i c i p a t e in
b u d g e t i n g is u n l i k e l y t o i m p r o v e t h e i r p e r f o r m -
a n c e . In s u c h c a s e s , p r e s c r i b e d r u l e s , p r o -
grammes, policies and standards may be more.
effective in the pursuit of improved perform-
ance.

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