ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
BUDGETARY PARTICIPATION, MOTIVATION
AND
MANAGERIAL PERFORMANCE
by
Peter Brownell
and
Mclnnes
Morris
J.
WP 1389-83
January 1983
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
BUDGETARY PARTICIPATION, MOTIVATION
AND
MANAGERIAL PERFORMANCE
by
Peter Brownell
and
J. Morris Mclnnes
WP 1389-83
January 1983
Abstract
The paper proposes an "indirect-effects" model linking participation in
budget-setting with managerial performance.
Motivation was selected as an
intervening variable to explore the proposed model in a field study
A significant positive association between participation and
setting.
performance was observed.
However, the indirect path linking participation
and performance through motivation was found to explain only a small amount
In the study, motivation was measured using an
of the relationship.
Further analysis revealed that greater participation in
expectancy model.
budget-setting was positively associated with the extrinsic components of
motivation, but negatively with the intrinsic components.
Contrary to
wide-held beliefs,
the
results seemed
to
suggest
that
participation
reinforces the contractual nature of the budget at the expense of the
personal
satisfactions
from
derived
goal-directed
and
behavior
The managerial implications of the "indirect-effects"
goal-accomplishment.
model, and of the findings of the study, are discussed in the final section
of the paper.
Budgetary Participation, Motivation And Managerial Performance
Early theorists (e.g., Argyris, 1952; Becker and Green, 1962) tended to
the view that participation in the budget-setting process was a major means
available
with consequent improvement in performance.
managers
of
organizations to gain the commitment
to
budgets,
to
summarized this
Hopwood (1976)
earlier sentiment when he suggested that participation was viewed by many as
"...a panacea:
a cure for all the many ills
Dudgetary
traditional
systems"
which have been associated with
even
Nonetheless,
74).
(p.
in
the
disagreement
non-empirical realm in which much of this debate was conducted
The reply to Becker and Green by Stedry (1964), together with
was evident.
Becker and Green's (19o4) rejoinder, illustrates the controversial nature of
the debate.
As subsequent empirical evidence accumulated, it became clear that these
l^ile evidence emerged of positive
earlier disagreements were well founded,
relationships
(Cherrington
motivation
towards
between participation and criteria
and
Cherrington,
(Hofstede,
the
budget
1967;
system
1973),
attitude
Searfoss
(Collins,
such as
towards
and
Monczka,
1973;
Kenis,
satisfaction
job
job
(Milani,
1973),
1979),
and
no
1975),
attitude
consistent
relationship with performance was found.
A possible explanation for the lack of an observed association between
participation
variables,
and
that is,
affect performance.
performance
revolves
around
the
role
of
moderating
variables which interact with participation jointly
to
This view gained formal recognition in the literature
with the emergence of the contingency framework for control system design
(see, for example, Waterhouse and Tiessen, 1978; Otley,
1980).
Specifically
with regard to participation, Brownell (1982a) has reviewed and synthesized
the literature within a framework which explicitly provides for
interactive
effects of participation with organizational,
Recent
variables.
work
empirical
interpersonal,
(Brownell
and individual
has
1982b)
1981,
produced
results consistent with this "moderated-ef f ects" framework.
A
possible
second
literature
from
emerges
and
explanation,
one
the
organizational
in
pursued
in
this
In
behavior.
paper,
literature in the area of goal setting and routine task performance,
and
Schweiger
could
(1979)
find
no
evidence
between participation and performance.
on
to
that
propose
performance,
extent
the
to
may
participation
of
Locke,
is
it
et.
al.
found
to
p.
went
138)
with
associated
be
this
influencing
be
(1981,
Locke
association
systematic
a
of
review
a
through
the
joint
mechanisms of inducing higher goals and enhanced goal-commitment on the part
in
which
these authors imply an "indirect-effects" model
In other words,
of workers.
other
some
aroused
condition,
participation,
by
positively
is
associated with performance.
The
difference
between
and
"moderated-ef f ects"
the
"indirect-effects"
frameworks is significant, and deserves brief elaboration.
effects"
model
participation
neither
posits
directly
variable,
To
existence
affecting
illustrate,
variables which may
of
performance;
affect
to
participation.
the
internal/external
locus
(1981)
found
control
of
participation to affect performance.
Internals were
perform
high
better,
preferred,
and
under
conditions
performed
of
low
effects
of
the
"indirect-effects"
latter
model
on
performance
posits
the
in
interacted
to
turn,
as
by
individual
the
found
prefer,
while
with
and
externals
conditions.
themselves unrelated,
and
contrast,
the
which
are
found.
existence
associated with participation and which,
-2-
were
affected
participation
However, participation and locus of control were
no
,
with
viewed
are
that
participation
under
better,
interact
being
nor
performance,
Brownell
variables
these
but
"moderated-
The
of
By
variables
affect
performance.
In
this framework,
it
between participation and
statistically significant associations
that
possible
is
intervening variable
some
on
the
and
hand,
one
between the intervening variable and performance on the other, could combine
in such a way as to yield an insignificant association between participation
and performance.
this study,
In
motivation was chosen as an intervening variable
empirical investigation of
indirect-effects
the
intuitive plausibility of motivation as an
model.
2
Apart
in an
from
intervening variable,
the
there
is
This is dealt with in
ample justification in the literature for its choice.
the next section of the paper.
Review of Previous Literature
Hofstede (1967),
in his seminal study of budgeting,
all variables studied,
participation is the one with the
budget
on all measures
effect
motivation"
of
observed that,
181-182).
(pp.
"Of
strongest
Hofstede
used
four
measures of motivation, dealing with the perceived relevance of the budget
and the existence of favorable attitudes towards the budget on the part of
budgeted
(1973)
managers.
who
studied
Similar
the
were
results
effects
on
found
by
Searfoss
motivation of participation
and
Monczka
by
general
foremen in the development of their budgets; motivation was measured through
the
use
of
subordinates'
ratings
of
the
level
of
effort
expended
by
the
foremen in goal-directing and evaluative activities based on the budget.
In both these studies the concept of motivation was operationalized in
terms' of acceptance of,
and effort expended to achieve the budget.
In this
study motivation is operationazlied by use of the expectancy model (see, for
example,
Galbraith
Livingstone [1975]).
general
in
its
and
Cummings
[1967],
House
[1971],
and
Ronen
and
The model, shown in Equation (1), is considerably more
interpretation
of
motivation
Hofstede and by Searfoss and Monczka.
-3-
than
the
constructs
used
by
It posits that individuals will exert
Equation 1
Expectancy Model of Motivation:
n
M = IV, +
b
Where:
P,
1
(IV
a
+1
.
,
1=1
P„. EV.)
1
2i
M is motivation
Ivjj
the
is
intrinsic
goal-directed behavior
with
associated
valence
the
is
or
probability,
instrumentality,
that
Px
goal-directed behavior will result in goal accomplishment
intrinsic
IV^ is the
plishment
associated with goal
accom-
is the expectation, or probability, that goal
plishment will result in the ith extrinsic outcome,
accom-
valence
P2i
i = 1,
,n.
EVi is the valence of the ith extrinsic outcome,
n.
i = 1,
,
effort
towards goal achievement to
likely
to
extent
that
be
the
extent
instrumental in achieving
positively valent
the
(desirable)
that
goal,
outcomes
such effort
is
perceived
additionally,
and
are
perceived
the
to
likely
to
result from goal-directed behavior and from goal-achievement.
The
intrinsic valences,
or
rewards,
arise
from within
individual -
the
essentially the personal satisfactions derived from goal-directed behavior and
goal-accomplishment.
external
to
the
The
extrinsic
individual,
such
valences
as
the
are
proferred
organization
(e.g.
by
some
agent
additional
pay,
promotion, etc.), peers, subordinates, or parties outside the organization.
Some possible effects
of
expectancy model have been suggested by Ronen and Livingstone
speculate,
for
example,
the
budgetary participation on the elements of
that
ego-involvement
-4-
associated
(1975).
with
They
pursuing
a
self-set goal will enhance IV
Kruglanski
extent
the
may
EV's
the
Staw,
example,
for
(see,
To
.
this
arise,
and
[1980]
11978]), which posits that extrinsic and intrinsic rewards are
state
some
theory
attribution
from
following
IV,
for
conseqences
adverse
attendant
however,
true,
is
also
and possibly
,
balance
psychological
of
respect
in
individual's
an
to
in
In other words, a strengthening of the attribution of effort
self-perception.
to the receipt of intrinsic rewards is a possible consequence
the removal
of
or reduction of extrinsic rewards, and vice versa.
A relationship of participation with
Raia
is also likely.
P
(1965)
This
suggested that more difficult goals emerge from participative budgeting.
translate into reduced perceptions of
might
to
P
but
,
increase
might
IV^
enhanced internalized value of achieving more difficult goals
the
has
due
(Locke
et. al., 1981, pp. 127 - 129).
How, or whether these opposing tendencies balance out in their effects on
LDotivation
effects
of
is
suggests
participation
an
however,
Overall,
unclear.
that
assessment
is
This judgment
enhancing than for diminishing motivation.
the
possible
opportunities
more
are
there
of
for
consistent with
the empirical findings referred to earlier.
Turning to a consideration of
question
this
is
Nevertheless,
behavior.
recently
been
using
relatively
a
with
dealt
given
to
in
the
the
largely
the
issue
effects of motivation on performance,
within
accounting
(Ferris,
construction
simple
the
organizational
of
attention
some
literature
1977;
of
domain
Rockness,
motivation,
1977).
found
has
Ferris,
inconclusive
results regarding the association between motivation and performance.
On the
more
complex
support
for
other
hand,
Rockness,
formulation of
the
in
an
experimental
expectancy model,
study,
found
and
relatively
using
strong
a
a
positive relationship.
In the
organizational behavior area,
-5-
much of the research examining the
relationship between motivation and performance stems from the work of Porter
and
Lawler
They
(1968).
and
performance
of
explanation
that
posit
also,
motivation
under
should
contribute
conditions,
specified
an
to
job
to
A great deal of subsequent research has been conducted and is
satisfaction.
summarized in several review articles (Mitchell, 1974; Wahba and House, 1974;
Connolly, 1970).
llitchell
(1979) concludes that most of the research results
support a positive relationship between motivation and performance.
Method
Data
for
the
study
were
by
collected
a
survey
questionnaire
from
224
middle-level managers drawn from three separate companies - two in the
electronics
positions
research,
industry
in
and
variety
a
one
in
the
steel
including
functions,
of
industry.
managers
The
production,
marketing,
One selection criterion was used,
and administration.
held
namely
that
activities of the managers should be controlled, at least in part, via the use
of
budgeting.
Final
sample
selection was
left
top
to
management
of
each
company; thus the sample was not strictly random.
The questionnaire measured participation in budget-setting, motivation and
performance.
Budgetary Participation
The
participation measures
by
Milani
by
Hofstede
each item calling for a response from one to seven.
The
study.
The Milani measure
previously performed factor analysis of the scale
confirmation
Cronbach alpha
and
item
in this
scale is designed for an additive construction of
adequate
(1975)
six
(1967) were both employed
Likert type scale,
developed
of
the
single
reliability coefficient
-6-
factor
the
computed
overall
(Brownell,
nature
from
is
a
score,
1982b)
and
a
provides
of
the
measure.
The
its
use
in
this
study
was 0.76.
Hofstede measure
The
verbal anchoring.
an
is
eight-point,
was used in this study simply
It
scale,
single-choice
with
validate
to
full
Milani
the
measure, with which it correlated at 0.59 (p<O.Ol),
Motivation
The questionnaire items were designed to elicit measures on each construct
of the model presented in Equation (1).
In the following discussion, we first
address valences, and then instrumentalities/expectancies.
Valences:
The
approach
measurement
the
to
of
valences was adapted
the
from the procedure developed by Lawler and Suttle (1973) in such a way as to
distinguish
between
three
the
classes
of
valence
(IV,,
IV
b
Seventeen outcomes were used,
outcomes)
A.
one
or extrinsic
and
,
EV's).
classified a priori as either intrinsic
The outcomes are listed
outcomes).
(nine
a
(eight
in Appendix
For each outcome, respondents were twice asked to indicate on a scale from
to
nine
(extremely desirable
to
their preference for that outcome.
extremely undesirable)
3
the
strength of
First respondents were asked to value each
outcome as it might result from "working hard"
(goal-directed behavior), and
then to value each outcome as it might arise from "meeting or beating budgeted
goals"
(goal-accomplisl"UDent)
.
measured
was
IV,
responses to the intrinsic items from the
measured
by
averaging
responses
the
to
the
first
averaging
by
set
responses.
of
eight
same
the
items,
but
eight
IV
was
from
the
second set of responses.
The use of the same eight intrinsic outcomes in the
measurement
IV
of
IV,
and
pre-supposes
that
a
given
from either goal-directed behavior or goal-accomplishment;
outcome
may
and moreover,
arise
that
the value placed on it might vary depending on how it arises.
The
assessed
valences
from
associated
the
second
with
the
nine
set
of
responses
-7-
extrinsic
outcomes
(outcomes
(EV's)
resulting
were
from
•
feoal-accomplishment)
Instrumentalities/Expectancies:
Equation (1)
the
requires
assessment
of
nine specific instrumentalities associating goal-accomplishment with extrinsic
outcome
These instrumentalities were assessed by asking respondents
(Pn's).
to indicate on a scale from one
(never)
would
result
or
beating
budget"
the
behavior
would
result
each
in
questionnaire items elicited measures of
goal-directed
how often "meeting
to seven (always),
P-,
in
the
,
Three
outcome.
additional
perceived probability
goal-accomplishment.
For
that
ease
of
interpretation, the instrumentality responses were converted to probabilities
in the range of zero to one.
(p
P,
<
were significantly
The three assessments of P,
A single measure of
0.01) correlated, with a mean correlation of 0.35.
was derived by averaging the three responses.
measure
final
The
of
was
motivation
obtained
then
by
aggregating
the
individual constructs following Equation (1).
Performance
A self-rating version of
et.al.
(1963,
the
performance
measure
developed
overall
106-107)
rating.
indicated
that
In
the
Mahoney
The measure calls for ratings on a nine-point
1965) was used.
scale for each of eight separate dimensions of performance
single
by
developmental
eight
work,
Mahoney
,
et
separate dimensions were
together with a
al.
(1963
conceived
of
pp.
as
being independent, and that jointly, the dimensions should explain at least 55
per cent of the overall rating (the remainder being explained by job-specific
factors).
Each of these claims was tested in the current
study.
To
assess
dimensional independence, a rule of thumb suggested by Pindyck and Rubinfeld
(1976, p. 68) was used.
is
likely
to
be
a
Multi-collinearity among an independent variable set
concern
if
the
sample
correlation
between
two
of
the
independent variables (dimensions) is larger than the correlation of either or
-8-
both with the dependent variable (in this case,
possible
comparisons,
intercorrelations
three
only
overall rating).
the
violated
second
claim,
overall
the
The
sub-dimensions.
performance
rating
regressed
was
regression explained 78 percent of
criterion,
this
indicating that the eight dimensions are reasonably independent.
To test the
on
eight
the
variance
the
28
Of
in
the
overall ratings, implying that only 22 per cent of the functions critical to
effective performance were job-specific in the current sample.
Approach to Anal ysis
Because
motivation,
Instead,
major
the
of
ordinary
hypothesized
multiple
partial regression,
benefit
relationship
of
path
between
regression
in the
analysis
two
collinearity
cannot
spirit
that
is
in
variables
a
of
it
participation
between
used
be
path analysis,
allows
analysis.
was used.
decomposition
a
structural
the
in
model
and
into
the
The
of
the
direct
effects of one on the other, as well as the indirect effects of the first on
the second, via one or more intervening variables.
The basic form of the structural model hypothesized earlier is depicted
in Figure 1,
denoted
as
coefficients
where participation,
X,
,
in
motivation
the
model
as
exogenous variable
the
X~,
are
and
performance
denoted
p.
.,
and
in
the
X^.
as
R,
model,
The
denotes
is
path
the
unexplained portions of the endogenous variables, motivation and performance.
-9-
Structural Model
Figure 1:
The equations to the structural model are as follows;
Xo = ^21
1
(2)
'^Zu u
X. = p^^X + p^„X + p R
32 2
^3v V
31 1
The
solution
correlation
^-i^'
for
p„
,
be
can
directly
A path coefficient
correlation between
zero-order
(3)
them
assessed
between two variables will equal
circumstances
in
where
(motivation)
only on
which,
in
variable
model,
is
conceived
of
variable
the
is
as
being
dependent
(participation).
X,
The solutions to p^^
ways.
the
a
the
This is true for
viewed to be dependent on a single cause and a residual.
X
computing
by
One
possibility
procedure.
^"^"^
Pin
^^^ ^^ obtained in several equivalent
(Stokes,
This
1974)
involves
-10-
is
by
means
multiplying
of
an
equations
instrumental
by
suitable
Suitable instruments are
taking expected values, and solving.
instruments,
variables contained in a particular equation which are uncorrelated with the
residual variable of that equation.
X^ are suitable, but
X-,
In equation
(3),
for example,
X
and
is not.
A second approach, and the one used here, involves partial regression.
If,
as above,
it
assumed that
is
variables
explanatory
in
the
residuals are uncorrelated with the
the
equations
variables are expressed in standard form,
by
ordinary
squares
least
in
which
they
then the
p. .'s
they
procedures;
standardized partial regression coefficients.
are
in
appear,
can
fact
be
and
all
estimated
equal
Equations (2) and (3)
to
the
can be
rewritten as follows:
^2 = e2iX^ + P2, R,
^3= ^31.2^1^^32. 1^2
(4)
+P3v^
^^^
The residual path coefficients can be calculated using the general form:
= / (1 - r^)
p.
le
2
where
e
is
r
coefficient.
the
square
of
the
appropriate
multiple
correlation
In the present context, we have:
P2u
= ^ ^^ - ^12^
P3v
-
•/
(^)
^1 - ^3.12)
<7)
Finally, the decomposition of the total effect of one variable in the
model
on
another
is
obtained
using
the
computed
path
zero-order correlations:
^12 = P2I
rj_3
^8)
= P31 + P32ri2
(9)
r23 = P32 +
P3;l^12
^l^^
-11-
coefficients
and
The
capture
on
components
second
indirect
the
the
right
hand
while
effects,
side
the
equations
of
and
(9)
components,
first
(10)
path
the
coefficients themselves, capture the direct effects.
Results
Of 224 questionnaires distributed, 140 were returned, a response rate of
02.5%.
Of
questionnaires
returned
140
the
improper or incomplete responses.
The
zero
and
motivation,
are
performance,
reported in Table
the
shown
are based on a
1
were
excluded
because
of
The final sample size was therefore 108.
correlations among
order
32
in
participation,
variables,
three
Table
two-tailed test,
probabilities
The
1.
all
as are
other
the
results presented in the paper.
INSERT TABLE 1 HERE
The set of
procedure
the
regressing
variables
is
P32*
path
X
are
The
path coefficients
outlined
on
X
in
the
and
X
results
coefficients,
of
and
the
the
previous
in
The
standardized.
equation
of
regression
overall
are
INSERT TABLE
-12-
2
HERE
X
is
presented
regression
significant.
regression
on
coefficient
approach
The
section.
multiple
a
following
were computed
(3)
itself,
in
which
in
p^,
,
and
Table
are
involves
all
on
2.
positive
X„
Both
and
The path coefficients
for
the
errors
in
Figure
1
derived
are
by
the
application of the formulae in Equations (6) and (7) to the results obtained:
= 0.990
p.,
2u
P3^ = U.984
the decomposition of
Finally,
in
Figure
1
Equations
following
performed
is
total effects within the model
and
(9)
(10),
presented
and
the
decomposition is summarized in Table 3.
INSERT TABLE 3 HERE
The
results
performance,
proportion,
indicate
the
effect
that
of
through
the majority appearing
total
the
motivation
to
be
of
effects
accounts
The
direct.
participation
for
only
lack of
a
on
small
explanatory
power of motivation as a mediator of the effects of participation was,
of
course, first hinted at in Table 1, where the zero-order correlation between
the
two was found
be
to
conclude that the bulk of
necessarily
insignificant.
the
Other
direct.
It
is,
nonetheless,
premature
to
effects of participation on performance are
variables,
operating
like
motivation
but
unmeasured in this study, could account for some or all of what in the study
has been accounted for as an apparent direct effect.
Further Analysis and Interpretation
In
the
aggregate
analysis,
participation
significantly associated with one another.
and
motivation
the expectancy
The results of the analysis are shown in Table 4.
-13-
not
To examine this finding further,
the associations between participation and the components of
model were explored.
are
INSERT TABLE 4 HERE
In
the
column
first
simple
the
correlation
between
coefficients
participation and the nine extrinsic valences are shown.
Four of
the nine
There is no a priori reason to suppose
are negative and five are positive.
that extrinsic valences should be influenced by the degree of participation,
and this is
in
relation
column.
to
out.
However,
participation;
While only five of
significant,
The
borne
third
namely,
the
column shows
and the products of
participation,
the
largely
contribution of
the
nine
the
shown
are
and
through
effect
rewards
to
on
second
three
are
between participation
extrinsic valences.
the
its
the
high pay and promotion.
correlation coefficients
^ j' s
in
coefficients are positive,
probability of pay raise,
extrinsic
the
coefficients
the
interesting pattern
display an
P„'s
the
P^'s,
the
-
motivation
seems as
It
enhances
particularly
if
the
those
rewards within the official power of the organization to bestow.
An interpretation of this is that participation serves to legitimize the
budget as a basis for performance evaluation and contingent administration
of
organizational rewards.
Such a conclusion
consistent with previous
is
findings (Brownell, 1982b), to the effect that a "budget-constrained" style
of
evaluation was
budget-setting;
appropriate
conversely,
in
circumstances
managers
were
of
found
high
to
in
participation
respond
poorly
to
participation when the budget was not used as a salient basis for evaluation.
Column's
and
the
4
and
intrinsic
5
show the correlation coefficients between participation
valences,
both of these groups,
six of
the
eight
eight of
-14-
IV 's
a
the
and
the
eight
IV, 's.
For
D
coefficients are negative
(p
<
using
0.11,
binomial
a
test);
12
overall,
participation and intrinsic valences are negative (p
belief
the
increasing
level
the
to
reduction
with
previous
the
strengthening
extrinsic
with
rewards
[1980]
appears
to
in
diminish,
the
participation
of
and
task
the
line
In
Kruglanski
and
[1978]),
and
goal-accomplishment
between
instrumentality
the
of
(Staw
suggestions
of
in
goal-accomplishment.
from
by
pursuit
the
perspective,
devaluation
significant
derived
satisfaction
the
intrinsic
an
with
associated
be
of
from
Indeed,
manner.
appears
goal-commitment
enhance
associated
ego-involvement
of
to
likely
Contrary to
0.03).
<
these results suggest that it appears to be acting
self-set goals,
opposite
is
participation
that
between
correlations
16
of
some
degree,
intrinsic
the
valences.
The
correlations
and
participation
between
the
three
measures
of
P,
(the probability that goal-directed effort will lead to goal accomplishment)
Participation correlates with the overall
were all found to be positive.
measure
of
0.18
at
P-,
explanations
Two
0.08).
<
(p
of
would
this
First, perhaps participation acts to strengthen goal commitment,
plausible.
There
effort, and therefore the perceived probability of goal-achievement.
is
be
considerable
evidence
from
organization!
the
behavior
literature
(see
Locke et al., 1981) that the intrinsic value of goal accomplishment tends to
increase as the level of goal difficulty increases.
is central
study,
the notion of
to
however,
intrinsic
valences
A
explanation.
opportunity
introduced
the
to
by
goal-setting and motivation.
negative
relating
second
to
goal-accomplishment
is
explanation
negotiate
easier
participation
between
association
that
goals;
(Schiff
and
this mechanism
Indeed,
In
the
participation
is
at
odds
participation may
that
Lewin,
is,
budget
1970;
Onsi,
current
the
and
with
this
provide
an
may
be
slack
1973).
This
would be consistent with the observed negative association of participation
-15-
with the IV
less
since achieving an easier goal would be likely to lead
's,
intrinsic
satisfaction.
Moreover,
since
participation appears
to
be
to
connected with the use of the budget to evaluate performance as a basis for
bestowing
it
rewards,
organizational
would
be
perfectly
rational
for
managers to perceive it to be in their self-interest to negotiate as low
a
budget as possible (Lowe and Shaw; 1968).
The preceding interpretation of
about
questions
Nonetheless,
the
the
study
benefits
of
participation
indicate
does
research findings raises important
the
significant
a
between participation and the overall measure
of
budget-setting.
in
relationship
positive
performance.
To
explore
this further, each of the eight sub-dimensions of performance was correlated
with participation, and the results are shown in Table 3.
INSERT TABLE
All eight
examination
correlations
of
the
are
pattern
5
positive,
among
the
HERE
and
significant
(p
<
0.05).
suggests
coefficients
that
An
the
dimensions of managerial performance which are most strongly associated with
participation are precisely those which might be expected to be strengthened
by judicious use of a budget as a managerial tool,
in particular planning,
investigating and evaluating.
Limitations and Conclusions
The
aim
the
study
"direct-effects"
model,
an
and
has
of
performance
consequences
of
the
was
to
"indirect-effects"
potential
participation.
In
to
the
-16-
whether,
assess
add
model
to
our
interests
of
with
compared
linking
a
participation
understanding
parsimony,
of
a
the
single
variable, motivation, was included as intervening between participation and
The results of the study show that the indirect path through
performance.
motivation contributes relatively little to an explanation of the observed
association between participation and performance.
is insufficient grounds for abandoning
the
have
suggested
been
(Porter and Lawler,
performance
Lawler,
1968;
Other
For example, ability and role
co-determinants,
as
however,
"indirect-effects" model.
intervening variables could enter the model.
clarity
This evidence,
with
of
motivation,
Further research is
1971).
necessary to resolve this matter.
The form of the expectancy model of motivation adopted in the study also
requires further research and possible refinement.
offers
being
a
for
rationale
associated
with
goal-accomplishment.
recognizing
the
goal-directed
Moreover,
For example, Staw (1977)
possibility
of
extrinsic
rather
behavior,
valences
with
simply
than
multiple extrinsic valences enter
into
the
equation additively, whereas both the intrinsic valences enter the equation
as
single mean values.
This has implications
for
the
relative weightings
accorded extrinsic and intrinsic valences respectively in the calculation of
motivation.
Then there
is
the
question of
the
appropriateness
performance in a research study such as this one.
of
the
measure
of
The criterion variable of
ultimate concern is an organization's creation of profit potential and the
realization
primarily
of
this
concerned
organization.
through
with
efficient
the
operations.
regulation
In this limited context,
of
However,
managerial
the appropriate
budgeting
is
within
an
work
criterion variable
of direct interest is managerial performance, even if the connection between
managerial
concern.
performance and
organizational
effectiveness
remains
a
broader
This still leaves the issue of the reliability of self-ratings of
performance,
compared
with superior,
peer
-17-
or
subordinate
ratings.
While
self-ratings have been shown to exhibit leniency error,
provided the error
is not systematic among the respondents in a manner which is collinear with
any of the independent variables, the research findings will be unaffected.
Furthermore, Kavanagh et al. (1971) have suggested that self-ratings provide
greater discrimination among dimensions of performance than do other sources
of rating, and may therefore be more reliable in analyzing the components of
performance which contribute to the overall assessment.
this,
Having said
however, exhortations (e.g. Steers, 1977) to devote more research effort to
clearly
better techniques for measuring performance are
the development of
valid.
Finally,
there
is
the
among variables
effects
issue
of
the
model
in
and
causality
the
analysis
The
proceed.
direction
which
in
done
in
the
study does not permit any inference about the causalities; these can only be
constructed
perceived
from
supporting
in
participation
In
theory.
this
study,
may
budget-setting
it
cause
is
implied
higher
levels
motivation, which in turn may cause higher levels of performance.
dynamic,
for a
inter-temporal context a
rationale
reverse chain of causality - i.e.
could
be
to
of
in a
But,
constructed
argue
high performance leading
to
high
reality)
of
high
is entirely possible
that
motivation leading to a perception (and indeed perhaps a
participation in budget-setting.
that
For example,
it
participation might be viewed as a luxury affordable only to organizational
units already performing satisfactorily.
i^ven
recognizing
the
limitations
of
the
study,
the
potentially of significance in the design of control systems.
is
a
costly control strategy,
findings
are
Participation
since it consumes managerial resources.
The
may
be
compensated by improved managerial performance.
But, on the other hand,
the
findings
the
findings
of
also
the
study
indicate
indicate
some
that
latent
the
costs
-18-
control
in
system
cost
participation
process,
arising
in
First,
ways.
two
sacrificed through the creation of
organizational
supplanting
being
intrinsic
costless
suppression
the
to
could
induce
on
the
achievement
These
latter
organization;
stated
rewards.
hidden
And
budgetary slack.
contingent
rewards,
performance
potential
some
costs
rewards
even
through,
of
for
costly
may
be
viewed
as
budgets,
be
being
be
secondly,
could
more
may
their
strongly,
example,
diminished
creativity within the organization.
It
is
precisely
because
of
these
hidden
consequences
that
"indirect-effects" model is potentially of considerable practical,
as theoretical, interest.
which
participation
benefits,
as well
A greater understanding of the mechanisms through
affects
performance
should
provide
management
basis for designing the participation process in such a way as
all the
the
and to drive
out
the
this study have indicated.
-19-
latent
costs which the
to
with
a
capture
results
of
TABLE 1
Zero-Order Correlations Between Variables
Participation(Xi)/Performance(X3)
Participation(X]^)/Motivation(X2)
Motivation(X2)/Perforroance(X3)
TABLE
,
,
,
Intercept
Value
p<O.Ol
r =
0.139, n.s.
r =
0.248, p<O.Ol
2
Calculation of Path Coefficients
Coefficient
r = 0.369,
Standard
Error
P3-]^
and P32
t
TABLE
4
Correlations between Participation and
the Elements of the Expectancy Model
Outcome*
TABLE
5
Correlations between Participation and
the Eight Sub-Dimensions of Performance
Planning
Appendix A
List of Outcomes
Eight intrinsic and nine extrinsic outcomes were used in this study.
Extrinsic
Intrinsic
1.
Pay Raise
1.
Personal growth and development
2.
High Pay
2.
Setting higher standards for yourself
3.
Respect from boss
3.
Giving help to others
4.
Respect from other employees
4,
Time at work passing fast
5.
Receiving more compliments
5.
Feelings of security
6.
Greater chances for independent 6.
'
Setting higher standards for others
thought and action
7.
Fewer chances to make friends
7.
Feelings of accomplishment
8.
Special reward or recognition
8.
Being tired
9.
Promotion
-23-
Appendix B
The
solution
equation
to
variables.
instrumental
(3)
can
be
suggested
As
through
derived
earlier,
X,
and
suitable instruments since they are assumed uncorrelated with R
the
X„
use
of
serve
as
.
Multiplying both sides of (3) by X, and then by X„ gives:
'"'
hh
=
hh
- ^31^1^2-^ P32^2 ^
P3l4
P32V2
^
^
^'^
^3v\K
^^^^
P3v^2\
Taking the expected value of each of (i) and (ii) gives
r^3 = P31 + P32ri2
^^23 =
and
(iii)
^^^^^
^^^^
P31^12 + P32
follow
(iv)
from
(i)
and
(ii)
since,
for
standardized
variables,
^'^^
(a)
E(X.X.) = r.
(b)
E(X^) = 1.
.
1
The terms involving R
disappear since
E^^i^v) = ^X.R = 01 V
(iii)
(poi
and
and Pon)«
_
represent
(iv)
system
of
two
equations
Solving (iii) and (iv) simultaneously gives
"^
^^13
P3I
^^12^23
1\
P 32
a
"^
^ ^23
,
1
(v)
2
r^2
^12^13
(vi)
2
- r^2
-24-
in
two
unknowns
Substituting the values from Table 1 for the r's in (v) and (vi) gives
p,
" 0*201, values identical to those shown in Table 2.
= 0.341, and
^^^
25-
Footnotes
1.
An internally controlled individual attributes the outcomes of his o\^m
actions to himself, while an externally controlled individual tends to
attribute these outcomes to chance, luck, or fate.
See Rotter [1966]
for details of this variable, together with the instrument used to
measure it.
2.
Of course, we do not
intervening variable,
inclusion.
intend to imply, by its
motivation is
the
that
choice as a single
for
candidate
only
3.
These raw scores were reversed and rescaled by subtracting five from all
scores.
As a result of this procedure, "neutral" responses score zero,
while responses in the "desirable" direction score positively (one to
four) and responses in the "undesirable" direction score negatively
(minus one to minus four).
4.
The dimensions were planning, investigating, coordinating,
supervising, staffing, negotiating and representing.
5.
This procedure is also used to test the suitability of more parsimonious
In general, the assessment
models which exclude one or more linkages.
is
of
on
the
matrix
suitability
based
whether
original
of
intercorrelations among the variables in the model can be reproduced by
a more parsimonious model.
For elaboration, see Land (1969).
6.
As previously
since P2i is
7.
The equivalence of the coefficients derived here with those resulting
from the instrumental variable procedure is demonstrated in Appendix B.
evaluating,
mentioned, it was not necessary to solve equation (2)
equivalent to r]^2> the zero-order correlation between
participation and motivation.
-26-
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-29-
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