7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 1/27
JOURNAL OF INTERNATIONAL ACCOUNTING RESEARCH American Accounting AssociationVol. 12, No. 1 DOI: 10.2308/jiar-503852013pp. 29–54
Budgetary Participation in Turkey: TheEffects of Information Asymmetry, Goal
Commitment, and Role Ambiguity on Job
Satisfaction and Performance
Johnny Jermias and Fatih Yigit
ABSTRACT: This study empirically investigates the antecedent, mediating, and
outcome variables of budgetary participation in Turkey. Turkey is an interesting setting
to investigate the impact of budgetary participation on job satisfaction and performance
because of its unique cultural and institutional factors. We propose that the information
asymmetry between superiors and subordinates creates the need for budgetary
participation, and the outcomes of budgetary participation ( i.e., job satisfaction and
performance) will be mediated by goal commitment and role ambiguity.
Based on a questionnaire survey of 194 mid-level managers in Turkey, we find that
role ambiguity mediates the budgetary participation–job satisfaction and budgetary
participation-performance relationships. The results are consistent with the view that the
primary benefit of budgetary participation is to decrease role ambiguity, leading to more
job satisfaction and better performance. Furthermore, we find that goal commitment
mediates the budgetary participation-performance relationship. This result suggests that
participation in the budgeting process increases goal commitment, which in turn leads to
better performance. This study will be beneficial for companies in general and for
organizations in developing countries in particular to realize that budgetary participation
alone does not improve job satisfaction and performance. Rather, it is the increased
commitment and decreased role ambiguity that results from managers’ participation in
the budgetary process that improves job satisfaction and performance.
Keywords: budgetary participation; information asymmetry; goal commitment; role
ambiguity; job satisfaction; performance.
JEL Classifications: D21; G32; L1; M41.
Johnny Jermias is an Associate Professor at Simon Fraser University, and Fatih Yigit is a Research Assistant
at Istanbul Medeniyet University.
We thank the companies and their representatives for their generosity to provide data used in this study. We are gratefulfor insightful comments and suggestions from Stephen Salter (editor), two anonymous reviewers of this journal, IreneGordon, Dennis Chung, Karel Hrazdil, Yasheng Chen, Kim Trottier, as well as participants of the Simon Fraser University accounting seminar, the 2011 Canadian Academic Accounting Association Annual Conference, and the 2011European Accounting Association Annual Congress.
Editor’s note: Accepted by Stephen B. Salter, Associate Editor.
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 2/27
I. INTRODUCTION
A
n abundance of research investigates the relationship between participative budgeting and
performance. The popularity of this topic is based on the widely held premise that
participation in decision making in general, and in the budget-setting process in particular,
is the ideal approach to governance. Researchers have argued that participative budgeting leads tomore job satisfaction and better performance for subordinates because it leads them to perceive that
they are being treated by their superiors as valuable partners in the decision-making process, which
in turn creates higher morale, greater motivation, and higher commitment.
While previous research has shed light on the relationships between budgetary participation and
performance, most studies were conducted in developed countries such as the United States and
Australia. Few studies have looked at these issues in developing countries. Our study addresses this
gap by investigating the antecedents, mediating variables, and consequences of budgetary participation
in Turkey, a developing VISTA country that is playing an important role in international markets.1
The impact of budgetary participation on various outcome variables might be different in the
Turkish setting than in a developed country. For example, Jermias and Setiawan (2008) found that top management in developing countries is often reluctant to share information with subordinates
because it fears the subordinates will manipulate and misinterpret that information. This is partly
because many senior managers are politicians and like to maintain a power differential with their
subordinates (Alam 1997). In a similar vein, Uddin and Hopper (2001) assert that managers in
developing countries might participate in the budgeting process because they fear being punished,
not because they want to make meaningful contributions, as these countries are often characterized
by high unemployment rates and do not adequately recognize and protect human rights.
Furthermore, few studies have used a comprehensive model that considers not only the
antecedent conditions that create a demand for participation, but also variables that mediate the
relationships between budgetary participation and performance. Some researchers have argued that
incorporating the antecedents and mediating variables may lead to a better understanding of the
relationship between budgetary participation and performance (e.g., Hopwood 1976; Chenhall and
Brownell 1988; Kren 1992; Shields and Young 1993; Shields and Shields 1998; Parker and Kyj
2006; Leach-Lopez et al. 2007; Chong and Johnson 2007). For example, Shields and Young (1993)
suggest that the mixed results of previous studies are due to the use of incomplete models. They
argue that researchers need to develop models that consider the particular antecedents of
participative budgeting and investigate the consequences of participative budgeting by taking
theoretically based intervening variables into account. Only two recent studies have done this (e.g.,
Maiga 2005; Chong and Johnson 2007), and both use task uncertainty as the antecedent of budget
participation. In contrast, our study uses information asymmetry as the antecedent of budgetary
participation. We use both an agency theory perspective and Turkey’s cultural perspective to
develop our hypotheses regarding the relation between information asymmetry and budgetary
participation. Therein, we also argue that goal commitment and role ambiguity will mediate the
relationship between budgetary participation and job satisfaction, as well as budgetary participation
and performance. We propose that the relation between budgetary participation and both job
satisfaction and performance is indirect, operating initially via the effect of participation in reducing
role ambiguity, and then by decreased role ambiguity improving the outcome variables. Similarly,
we argue that the relation between budgetary participation and both job satisfaction and
performance is indirect, operating initially through the effect of participation in increasing goal
commitment, and then by increased goal commitment improving job satisfaction/performance.
1 The term VISTA refers to Vietnam Indonesia South Africa Turkey and Argentina and has been coined in recent years
30 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 3/27
Based on a survey of 194 mid-level managers in Turkey, we find that budgetary participation
decreases managers’ role ambiguity, resulting in more job satisfaction and better performance.
Furthermore, we find that goal commitment mediates the budgetary participation-performance
relationship such that it increases participation, which leads to higher commitment and in turn
improved performance. However, the mediating effect of goal commitment on the relationship
between budgetary participation and job satisfaction is not statistically significant.
The results indicate that the direct effect of budgetary participation on performance is not
significant when goal commitment and role ambiguity are mediating variables, but the indirect
effects of budgetary participation on performance running through goal commitment and role
ambiguity are positive and significant. These results suggest that the main benefits of budgetary
participation are an increase in managers’ commitment to their goals and a decrease in role
ambiguity. In other words, when managers are committed to their goals and have a clear
understanding of the role they are expected to perform, they will perform better. With respect to the
antecedent variable, we cannot find evidence of a relation between information asymmetry and
budgetary participation.
This study contributes to existing literature on budgetary participation and practice in three
ways. First, the study was conducted in Turkey, and no previous study on budgetary participation in
Turkey can be found in the literature. Turkey is a particularly interesting setting for such a study
because of its unique cultural and institutional factors. National culture may significantly influence
the extent of budgetary participation and its role in affecting job satisfaction and performance. For
example, in Turkey, the superior-subordinate relationship often goes beyond the workplace and
superiors tend to treat their subordinates as their extended family; subordinates often share private
information informally and not merely during the budgeting process (Kabasakal and Bodur 2002).
Furthermore, Turkish people have a higher uncertainty avoidance index than American and
Australian people, and preference for team-oriented charismatic leaders (House et al. 1999).
Managers in Turkey might therefore participate in the budgeting process not to share their privateinformation, but to obtain clear guidance about how to perform their task and to reduce their role
ambiguity, which would lead to better performance.
Institutionally, our respondents are managers of firms owned by the Istanbul Metropolitan
Municipality that operate in various sectors of the economy, including road construction, mineral
water filling, sea transportation, car park management, and technology. The government (i.e.,
municipalities) owns most Turkish large-size companies and therefore has a significant influence on
the management of these companies. However, although the Istanbul Metropolitan Municipality
owns these firms, they are by law private entities and have not been given monopoly rights. Instead,
they have to compete against private companies for contracts with the municipality. As most of
these firms are the biggest entities in their respective sectors, they usually win their bids toundertake the municipality’s projects. Most of these firms also provide services to the public. Given
these unique characteristics, participation might have a different effect on the performance of the
firms we chose to study than on firms in more conventional free-market economies, such as the U.S.
and Australia (where most of the previous studies were conducted).
Second, the results of this study indicate that the direct effect of participation on performance is
not statistically significant. These results are consistent with those reported by Chenhall and
Brownell (1988). Thus, simply allowing managers to participate in the budgeting process does not
have a beneficial effect for the company. The benefits of participating in the budgeting process can
only be realized when managers have a better understanding of their role, perceive the goals they
are accountable for as attainable, and are committed to those goals.
Finally, our study incorporates the antecedent, mediating, and outcome variables of budgetary
participation. As such, this study sheds important light on the antecedents of budgetary participation
Budgetary Participation in Turkey 31
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 4/27
The remainder of the paper is organized as follows. Section II discusses previous related
literature in order to develop the hypotheses. Section III explains the research design, sample
selection, and variable measurement. Section IV presents the results of the statistical analyses, and
Section V provides a general discussion of the main results, the limitations of the study, and
directions for future research.
II. RELATED LITERATURE AND HYPOTHESES
Participative budgeting has attracted much attention in accounting and management literature.
Earlier studies tend to focus on the consequences of participative budgeting and have reported
mixed results (e.g., Milani 1975; Brownell 1981; Brownell and McInnes 1986 ). Shields and Young
(1993) argue that the mixed results of participative budgeting research are due to the incomplete
models used by previous researchers. Brownell (1981) suggests that researchers need to specify the
conditions under which budgetary participation would be effective before investigating its
consequences. Shields and Young (1993) take this issue one step further in proposing that
researchers need to develop theories that consider not only the antecedents of participativebudgeting, but also the variables that might mediate the relationship between participative
budgeting and its various outcomes (i.e., job satisfaction and performance).
A limited number of studies on participative budgeting have been conducted in developing
countries. Leach-Lopez et al. (2007) investigate the impact of budgetary participation on job
satisfaction and performance using Mexican and U.S. managers. They find that budgetary
participation positively affects job satisfaction and performance. In a similar vein, Leach-Lopez et
al. (2007), who conduct a survey among South Korean managers, find that budgetary participation
positively affects job satisfaction, and in turn, positively affects performance. Lau et al. (1995) use a
sample of 240 functional heads from 80 Singapore manufacturing companies to investigate the joint
effect of budget emphasis, budgetary participation, and task characteristics on job-related tensionand managerial performance. They find that in a high-task-difficulty situation, budgetary
participation is positively related to performance. In a low-task-difficulty situation, however, they
find that the effect of budgetary participation on managerial performance is moderated by the extent
of budget emphasis. In a subsequent study using a sample of 189 Australian and Singaporean
financial services sector managers, Lau and Tan (1998) find that budgetary participation interacts
with task difficulty to affect performance.
Several studies have been conducted in Islamic countries to investigate the relation between
budgetary participation and various outcome variables. The results are inconclusive. Two studies
provide evidence that budgetary participation has a positive effect on performance. Noor and
Othman (2012) examine the relation between budgetary participation, organizational commitment,and managerial performance in the Malaysian public sector. They find that budgetary participation
is positively associated with both organizational commitment and managerial performance.
Mahjoub and Halioui (2012) investigate the impact of budgetary participation on organizational
performance using a sample of 89 Tunisian accounting and finance managers. Their results indicate
that the level of budgetary participation is positively associated with higher organizational
performance as measured by market share, growth rate, profit, prosperity, and innovativeness.
Other studies, however, report a negative association between budgetary participation and
performance (e.g., Douglas et al. 2007; Etemadi et al. 2009; Dakhli 2010) or find that budgetary
participation does not have any impact on performance (Hosen et al. 2011). Using a sample of 395
Egyptian managers, Douglas et al. (2007) find that budgetary participation is negatively associated
with performance as measured by incentive to create slack and slack creation behavior. Etemadi et
al. (2009) use a sample of 300 Iranian mid-level managers working for the manufacturing
32 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 5/27
and significantly related to managerial performance. Dakhli (2010) uses a sample of 75 mid-level
managers in Tunisia. She finds that budgetary participation is negatively associated with job
satisfaction. Hosen et al. (2011) investigate the influence of national culture on the level of
budgetary participation and performance using a sample of 178 managers of manufacturing
companies in Libya. Their results indicate that the relation between budgetary participation andperformance is not statistically significant.
Joshi et al. (2003) and Nasser et al. (2011) investigate the influence of culture on the level of
budgetary participation in two Islamic countries. Using a sample of 54 respondents from companies
in Bahrain, Joshi et al. (2003) find that the level of participation is high for both listed and
non-listed companies in Bahrain. They argue that the high level of participation is due to the high
collective cultural dimension for Bahrain, in which participation is encouraged since the
superior-subordinate relationships are characterized by a tightly knit social framework. In a similar
vein, Nasser et al. (2011) investigate the relation between various organizational variables on the
level of budgetary participation. Using 77 cost center managers in Jordanian universities, they find
that organizational related factors—such as size, type, or level of hierarchy—are not correlated withthe level of budgetary participation.
More recent studies on participative budgeting have incorporated antecedents and/or mediating
variables (e.g., Wentzel 2002; Lau and Tan 2003; Parker and Kyj 2006; Leach-Lopez et al. 2007;
Chong and Johnson 2007). With the exception of Chong and Johnson (2007) and Maiga (2005),
none of these studies incorporates the consequences of participative budgeting. Our study differs
from Chong and Johnson (2007) and Maiga (2005) in three ways. First, we use information
asymmetry as the antecedent of budgetary participation, while the other two studies use task
uncertainty as the antecedent variable. Shields and Young (1993) argue that information sharing is
the most important antecedent for budgetary participation. Through participation, subordinates have
the opportunity to communicate their private information, while superiors can clarify the tasksrequired to accomplish the budget (Kirby et al. 1991).
Second, our study uses both role ambiguity and goal commitment as mediating variables, while
Chong and Johnson (2007) and Maiga (2005) use only goal commitment. It is salient to note that
Chenhall and Brownell (1988) find that the use of role ambiguity as a mediating variable provides useful
insights into understanding the impact of budgetary participation on job satisfaction and performance.
Third, we use both job satisfaction and performance as the outcome variables, while the other
two studies only use performance. This is important because previous studies often consider job
satisfaction as a precondition for improved performance. However, Chenhall and Brownell (1988)
find that budgetary participation is significantly related to job satisfaction, but not to performance.
By considering job satisfaction and performance as two separate outcomes of budgetary
participation, our study might provide useful insights into the inconsistent results reported by
previous studies with regard to the relation between job satisfaction and performance.
Like Shields and Young (1993), we use a comprehensive model by considering the antecedent
(information asymmetry) and mediating variables (goal commitment and role ambiguity) of
budgetary participation and its consequences ( job satisfaction and performance).2
2 Job satisfaction has traditionally been thought by many researchers and practitioners to influence jobperformance. Recent studies (e.g., Bowling 2007), however, have revealed that the cause-and-effect relationshipbetween job satisfaction and performance does not exist. Bowling (2007), for example, found that job satisfactionand performance are related because the two constructs are the results of employees’ attitudes toward their jobs.Therefore, in this study, we consider job satisfaction and performance as two separate outcomes of budgetaryparticipation Chenhall and Brownell (1988) also consider job satisfaction and performance as two separate
Budgetary Participation in Turkey 33
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 6/27
Antecedent Variable: Information Asymmetry
Agency theory prescribes that subordinates have specific, private information about the tasks
they are held accountable for (Christensen 1982). According to this theory, subordinates tend to be
reluctant to reveal this information to their superiors unless the superiors will otherwise incur
significant monitoring costs or provide subordinates with an incentive for doing so. Nouri andParker (1996) argue that budgetary participation allows subordinates to reveal their private
information, which leads to better performance on their part and to economic gains for the
company. Allowing subordinates to participate in the budgeting process suggests that they are
perceived as valuable members of the company (Lawler 1981). As a result, they are more likely to
perceive the company’s goals as consistent with their personal aspirations, which will in turn
increase their motivation to achieve those goals (Locke 1968). Participation in the budget-setting
process also tends to result in more realistic budgets that set attainable targets.
An extensive review of studies on participative decision making led Locke and Schweiger
(1979) to report that information sharing is the single most important determinant of the
effectiveness of participative decision making. Similarly, Shields and Young (1993) contend that
one of the primary benefits of budgetary participation is that it facilitates the sharing of information
during the budget-setting process. Locke et al. (1981) concur with this observation in stating that
the most successful function of participation is that it allows workers to express good ideas about
how to improve their performance.
Two empirical studies (Shields and Shields 1998; Shields and Young 1993) report that
information asymmetry creates the need for budgetary participation. Based on a questionnaire
survey administered to 98 corporate controllers working for a number of Standard & Poor’s 500
companies, Shields and Young (1993) find that there is a positive association between the extent of
information asymmetry and the use of participative budgeting. Shields and Shields (1998) conduct
a survey among 60 managers who are graduates of an executive M.B.A. program. They find that the
need to share information is positively and significantly related to managers’ reasons for
participating in the budgeting process.
The above arguments indicate that information asymmetry is an important determinant of the
need for budgetary participation. The information sharing that is facilitated by budgetary
participation allows superiors to gain access to subordinates’ private information, which in turn
helps them to develop better strategies for meeting the budgets (Murray 1990) and to provide
subordinates with adequate resources (Nouri and Parker 1996). For subordinates, budgetary
participation might provide an opportunity to communicate perceptions of business opportunities
and risks, to negotiate more reasonable budgets, and to ensure that the budget is aligned with their
personal aspirations. Therefore, the higher the information asymmetry between superiors and
subordinates, the greater the need for budgetary participation.
Within the context of our study in Turkey, we offer an alternative view of the relationship
between information asymmetry and budgetary participation. Sumer (2000) finds that in a
paternalistic society such as Turkey, leaders have the acceptance and authority to evaluate
subordinates. However, superiors who are paternalistic leaders function like fathers to their
subordinates and usually are responsible for the well-being of subordinates in a holistic sense. In
return, the subordinates are expected to obey their leader, and show respect and loyalty (Kabasakal
and Bodur 1998). Superiors tend to demonstrate a concern for employees that goes beyond the
workplace. The structure of Turkish business is hierarchical and characterized by social class
distinctions, since the higher echelons generally come from the upper class. Superiors tell
subordinates what they have to do, and do not attempt to reach consensus, but also commonly treat
34 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 7/27
In addition, our respondents work for government-owned enterprises. Many senior managers of
these firms are politicians, and they like to maintain a power distance from their subordinates ( Alam
1997). These senior managers often fear that budgetary participation may create opportunities for
their subordinates to challenge their decisions and, in turn, jeopardize their reputation (Jermias and
Setiawan 2008). Subordinates therefore participate in the budgeting process not because they need
to share their private information, but due to their respect for and closeness to their superiors. Often,
information sharing occurs informally rather than through a formal budgeting process. These
conditions lead to the following null hypothesis:
H1: There will be no relationship between information asymmetry and level of budgetary
participation.
Mediating Variables
Chenhall and Brownell (1988) propose that researchers consider the circumstances in which
participation might or might not work. In a similar vein, Hopwood (1976) emphasizes the need toidentify the conditional factors that determine the usefulness of the budgetary participation
program, especially since situational variables might improve or impede its effectiveness. Recent
studies have documented that the direct effects of budgetary participation on job satisfaction/
performance may be influenced by various mediating variables (e.g., Wentzel 2002; Chong and
Johnson 2007). In alignment with these recent studies, we argue that participation–job satisfaction/
performance relationships are not direct and propose that goal commitment and role ambiguity
mediate these relationships.
Goal Commitment
Goal commitment is the determination to pursue a goal and an unwillingness to abandon it or lower its standard (Hollenbeck and Klein 1987). Klein et al. (2001) argue that goal commitment is a
critical aspect of the relationship between budget and performance because a budget can have no
motivational effect if employees have no commitment to the goals for which they are held
accountable.
Locke (1968) proposes that employees’ behavior is influenced by their conscious ideas and
intentions. Locke and Latham (1990) argue that subordinates will only consider putting effort into a
task if they perceive that it will be worth the effort and that the budget is reasonable. Accordingly, it
is desirable to include subordinates in the budget-setting process because it will enable them to
negotiate and eventually agree to the budget. Allowing subordinates to have some control over the
budget will also lead them to perceive that their superiors trust them. This may in turn increasesubordinates’ ego-involvement in company goals, acceptance of the goals, and commitment to
achieving them (Locke 1968). Locke (1968) contends that the most direct effect of participation is
subordinates’ commitment to the decisions that have been reached. Locke and Latham (1990) argue
that participation will lead subordinates to accept the goals as their personal objectives. In a similar
vein, Hofstede (1991) asserts that participation increases commitment to a goal because
subordinates internalize goals through the process of information sharing which occurs during
the goal-setting process.
Within the context of our study, Turks perceive a team-oriented leadership style to be the most
effective leadership style in Turkey (House et al. 1999). Leaders are expected to be collaborative,
loyal, and consultative. Other in-group relationships are also of critical importance in Turkey.
House et al. (1999) find that Turkey rates high on group and family collectivism (or low in
individualism), medium on power distance, and medium on feminism. With respect to power
Budgetary Participation in Turkey 35
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 8/27
other developing/Islamic countries such as Iran (58), South Korea (60), and East Africa (64). In
contrast, the power distance index for the U.S., Canada, the U.K., and Australia are 40, 39, 35, and
36, respectively. In terms of feminism, Hofstede (1991) indicates that Turkey’s feminism index is
45, which is relatively similar to East Africa (41), Iran (43), South Korea (39), and Arab countries
(53). The feminism index for the U.S., Canada, the U.K., and Australia are 62, 52, 66, and 61,respectively.
Societies with a low individualism index tend to react favorably to high budgetary participation
because decision making is shared among all members of the society and subordinates are viewed
as equal partners by the superiors. By contrast, societies with a high individualism index are likely
to favor low budgetary participation since the superiors are regarded as important individuals and
they are entitled to make decisions on their own (Lau and Caby 2010).
Hofstede (1991) suggests that societies with a high power distance index tend to react
negatively to participative budgeting since power is not shared between superiors and subordinates.
By contrast, societies with a low power distance index tend to favor participative budgeting because
such societies value equality in making decisions.With respect to feminism, Hofstede (1991) suggests that societies with a high feminism index
are characterized by the tendency to care for others and superiors who strive for consensus in
making decisions by stressing equality, solidarity, compromise, and negotiation in solving conflicts.
By contrast, societies with a low feminism index tend to expect that superiors should be decisive
and assertive. In addition, superiors tend to encourage competition among subordinates to achieve
better performance.
Based on the cultural index reported by Hofstede (1991), Turkey has a low individualism index
(37) as compared to those of the western countries such as the U.S. (91), Canada (80), the U.K.
(89), and Australia (90). Furthermore, Turkey has a medium power distance index (66), which is
slightly higher than those of the western countries such as the U.S. (40), Canada (39), the U.K. (35),and Australia (36). Interestingly, as indicated above, Turkey’s feminism index is quite similar to
those of the western countries as well as some of the developing/Islamic countries mentioned
above.3
Following the arguments of Lau et al. (1995), we expect that Turkish managers’ reactions to
budgetary participation will be favorable due to the strong positive impact of low individualism.
The effect of power distance and feminism on budgetary participation will be negligible since
Turkey has medium indices for these two cultural dimensions.
The above arguments indicate that Turkish managers will react positively to high budgetary
participation, and the impact of budgetary participation on job satisfaction and performance is
mediated by goal commitment. Allowing participation in the budgeting process gives superiors anopportunity to use consultation and diplomacy in order to create the sense that subordinates belong
to the group, which leads to increased commitment and improved outcomes (Kabasakal and
Dastmalchian 2001). Murray (1990) argues that budgetary participation will have a positive impact
on goal commitment and result in better outcomes. If subordinates are committed to the budget,
they tend to be more satisfied with their job and to put more effort into attaining the budget. Hence,
the following hypotheses will be tested:
3 According to Hofstede (1991), countries with a high feminism index are Japan (95), Austria (79), Venezuela (73),and Italy (70), while countries with a low feminism index are Sweden (5), Norway, (8) Netherlands (14), andDenmark (16 ). Since Turkey’s feminism index is neutral (almost at the middle point), we expect that feminismwill not have a significant impact on Turkish managers’ preference to participation. Moreover, since Turkey’sfeminism index is relatively similar to those of the western countries we expect that the impact of feminism on
36 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 9/27
H2: The relationship between budgetary participation and job satisfaction will be mediated by
goal commitment such that budget participation increases goal commitment, leading to
higher job satisfaction.
H3: The relationship between budgetary participation and performance will be mediated by
goal commitment such that budget participation increases goal commitment, leading tohigher performance.
Role Ambiguity
According to Chenhall and Brownell (1988), no theoretical argument supports the claims that
budgetary participation has a direct effect on job satisfaction or performance. Instead, they contend
that the effect of budgetary participation on performance is mediated by other variables such as role
ambiguity. Role ambiguity refers to a lack of clear understanding about the actions one is required
to perform in order to do one’s job correctly and efficiently (Kahn et al. 1964). Kahn et al. (1964)
propose that role ambiguity may include: (1) what tasks are expected to be performed, (2) how thetasks are to be performed, (3) how the performance will be evaluated, and (4) the consequences of
completing or not completing the tasks.
Previous studies have hypothesized that role ambiguity is detrimental to individuals as well as
to organizations. Studies documenting the negative consequences of role ambiguity in a number of
settings have consistently reported the negative impact of role ambiguity on job satisfaction/
performance (Wu and Norman 2006; Fischer 2001; Chenhall and Brownell 1988). Rizzo et al.
(1970) contend that high role ambiguity causes lower productivity, greater tension, dissatisfaction,
and psychological withdrawal. Fischer (2001) administers a questionnaire survey to 169 auditors
and finds that role ambiguity is negatively associated with job satisfaction and performance.
Chenhall and Brownell (1988) investigate the intervening effects of role ambiguity on thebudgetary participation–job satisfaction/performance relationship by administering a questionnaire
survey to 36 mid-level managers from a large manufacturing company. They report that role
ambiguity has a significant negative effect on both job satisfaction and performance.
Within the context of our study, Turkey has been identified as a country with high uncertainty
avoidance. According to Hofstede (1991), Turkey’s uncertainty avoidance index is 85, which is
quite similar to other developing/Islamic countries such as Mexico (82), Arab countries (68), and
South Korea (85). In contrast, the uncertainty avoidance indexes for the U.S., Canada, the U.K., and
Australia are 46, 48, 35, and 51, respectively. Hofstede (1991) defines uncertainty avoidance as the
extent to which the members of a culture feel threatened by uncertain or unknown situations and try
to avoid such situations. Societies with a high uncertainty avoidance index, such as Turkey, try tocreate security and avoid risk. Hofstede (1991) suggests that societies with a high uncertainty
avoidance index try to reduce uncertainty by creating rules and institutions to guide members’
behaviors and by establishing strong leaders that engage subordinates in decision-making
processes. These characteristics are consistent with the family and in-group orientation that is
predominant in Turkish society (Kabasakal and Bodur 1998). Therefore, we expect that Turkish
managers will participate in the budgeting process in order to decrease role ambiguity and, in turn,
increase job satisfaction and performance.
The above arguments indicate that Turkish managers will react negatively to role ambiguity,
and role ambiguity will mediate the effect of budgetary participation and job satisfaction/
performance. Subordinates’ participation in the budgeting process may clarify their understanding
of the tasks they are expected to perform, how to perform those tasks, how their performance will
be evaluated, and the consequences of meeting or not meeting superiors’ expectations. Chenhall
Budgetary Participation in Turkey 37
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 10/27
operated initially from the capacity of budgetary participation to reduce role ambiguity. They
predict and find that decreased role ambiguity improves job satisfaction and performance. In accord
with Chenhall and Brownell (1988), we test the following hypotheses:
H4: The relationship between budgetary participation and job satisfaction will be mediated by
role ambiguity such that budget participation decreases role ambiguity, leading to higher
job satisfaction.
H5: The relationship between budgetary participation and performance will be mediated by
role ambiguity such that budget participation decreases role ambiguity, leading to higher
performance.
III. RESEARCH METHOD
Sample
A survey questionnaire was used to collect data from all the firms owned and managed by the
Istanbul Metropolitan Municipality in the metropolitan Istanbul area.4 These firms operate in
various industry sectors.5 Table 1 shows the distribution of the respondents by industry. Most of the
firms are the biggest in Turkey in their respective sector because they routinely get contracts with
the municipalities that permit them to provide services to the public. However, these companies do
not have monopoly rights and face competition in their sector.
We first contacted the accounting managers of each firm to gain access to the potential
respondents. We then asked the accounting managers about the number of mid-level managers who
are responsible for setting and executing the units’ budgets.6 Based on this initial contact, we
identified 246 respondents and sent them the following materials: a letter explaining the purpose of the study, the questionnaire, and a self-addressed, stamped envelope. We received 204 responses,
which represented an 82.93 percent response rate.7 Ten responses were excluded from further
analyses because they were incomplete, so our final sample consists of 194 responses.
Table 2 shows the demographic information about our respondents. A majority of our
respondents are between the ages of 26 and 45 years old, and more than 90 percent of them are
male. It is not unusual in Turkey that the managerial positions are dominated by men, since they are
considered to have inherent characteristics that entitle them to governing roles (Topaloglu 1983).
4
The questionnaire was administered in Turkish. Two managers reviewed the questionnaire prior to administeringthem to the respondents in order to assess the degree of understanding that the questionnaires would generate. Asa result, minor modifications were made to the original questionnaire.
5 We contacted all firms (20 total) that are owned and managed by the Istanbul Metropolitan Municipality. Allfirms that were contacted participated in this study.
6 The purpose of contacting the accounting managers is to learn which units in the firms have their own budgets andto obtain information about the managers who are responsible for preparing and implementing the units’ budgets.We asked the following questions to the accounting managers: (1) How many mid-level managers do you have inyour company who participate in setting and implementing the unit’s budget? (2) Please provide the contact information of the mid-level managers who are responsible for setting and implementing the unit’s budget. Wethen sent the questionnaires to the mid-level managers recommended by the accounting managers. The mid-levelmanagers work in various departments such as human resources, production, accounting and finance, andmarketing. We purposely targeted mid-level managers who participate in developing and implementing the unit’sbudget.
7 This response rate is slightly higher than those reported by previous studies that use the same approach (Maiga 2005; Leach-Lopez et al. 2007; Chong and Johnson 2007 ). For example, Maiga (2005) reports a response rate of 76 37 percent (181 out of 237 questionnaires) while Leach-Lopez et al (2007) report a response rate of 55 65
38 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 11/27
TABLE 1
Distribution of Respondents by Industry
Industry Sector Target Responses
Response
Rate
Construction (3 firms) 26 19 73.08%
Energy (2 firms) 30 23 76.67%
Car Park Management (1 firm) 8 7 87.50%
Culture and Tourism (2 firms) 21 17 80.95%
Consultation (1 firm) 8 6 75.00%
Food and Beverage (2 firms) 24 21 87.50%
Garbage Treatment (1 firm) 17 15 88.24%
Health (1 firm) 15 14 93.33%
Landscaping (1 firm) 15 13 86.67%
Research and Development (1 firm) 10 6 60.00%
Sport (1 firm) 6 4 66.67%Technology (1 firm) 20 18 90.00%
Transportation (3 firms) 46 41 89.13%
Total 246 204 82.93%
TABLE 2
Demographic Information
Variable Description Frequency PercentageCumulativePercentage
Age 20–25 1 0.5 0.5
26–35 70 36.1 36.6
36–45 100 51.5 88.1
46 and up 23 11.9 100
Gender Man 175 90.2 90.2
Woman 19 9.8 100
Education Ph.D. 8 4.1 4.1
Master’s 40 20.6 24.7
Bachelor’s 126 64.9 89.7
Other 20 10.3 100
Length in present company 1–5 year(s) 58 29.9 29.9
6–10 years 57 29.4 59.3
11–15 years 75 38.7 97.9
16 years and up 4 2.1 100
Length at present position 1–2 year(s) 58 29.9 29.9
3–5 years 78 40.2 70.1
6–9 years 45 23.2 93.3
10 years and up 13 6.7 100
Staff under supervision 1–10 96 49.5 49.5
11–20 30 15.5 64.921–30 15 7.7 72.7
31 and up 53 27.3 100
Budgetary Participation in Turkey 39
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 12/27
Variable Measurement
This study used six variables to test the hypotheses presented in the previous section. This
instrument has been used extensively in previous studies in various settings and demonstrated an
acceptable level of construct validity and reliability (e.g., Kren 1992; Dunk 1993; Wentzel 2002;
Wu and Norman 2006; Leach-Lopez et al. 2007; Brownell 1981). An abbreviated version of thequestionnaire used in this study is presented in Appendix A.
Information asymmetry was measured using the six-item scale developed by Dunk (1993). He
contends that the six items in the instrument are based on the definition of information asymmetry
prescribed by agency theory and detailed in the literature. Participants were asked to distinguish
between the information possessed by superiors and subordinates. The response scales extended
from (1) ‘‘my superior has much better information’’ to (5) ‘‘I have much better information.’’
The extent of participative budgeting was measured using an instrument first developed by
Vroom and Mann (1960) that has been modified by subsequent and previous studies (e.g., Brownell
1981; Parker and Kyj 2006; Milani 1975; Jermias and Setiawan 2008). Respondents were asked
about their degree of influence on preparing and executing their budgets. The response scales
ranged from (1) ‘‘strongly disagree’’ to (5) ‘‘strongly agree.’’
Goal commitment was measured using three questions originally developed by Locke (1968)
that have been modified by prior research (e.g., Wentzel 2002; Maiga 2005; Chong and Johnson
2007; Murray 1990). Respondents were asked to indicate their level of commitment to the agreed-
upon goals. The response scales ranged from (1) ‘‘not at all’’ to (5) ‘‘very much.’’
We used the instrument developed by Rizzo et al. (1970) to measure role ambiguity. It is one of the
most widely used instruments for measuring role ambiguity (Chenhall and Brownell 1988; Wu and
Norman 2006; Fischer 2001). Respondents were asked how clear they were about various aspects of their
role: what was expected from them, how they were going to achieve their goals, how much authority they
had, and their level of responsibility. The response scales ranged from (1) ‘‘always’’ to (5) ‘‘never.’’
Job satisfaction or lack thereof is defined as the feelings workers have about their job or jobexperiences in relation to previous experiences, current expectations, and available alternatives
(Balzer et al. 1997). Degree of job satisfaction was assessed using an instrument developed by
Weiss et al. (1967), which has also been used by previous research in accounting literature (e.g.,
Leach-Lopez et al. 2007; Lau and Tan 2003; Murray 1990; Brownell 1981; Chenhall 1986;
Chenhall and Brownell 1988). Respondents were asked to indicate their level of satisfaction with
their job on scales ranging from (1) ‘‘very dissatisfied’’ to (5) ‘‘very satisfied.’’
Performance was assessed using the self-assessment scale originally developed by Mahoney et al.
(1965) that has been adapted by previous accounting studies (e.g., Kren 1992; Brownell 1981; Brownell
and Hirst 1986; Brownell and McInnes 1986; Parker and Kyj 2006; Jermias and Setiawan 2008). The
performanceindicators consist of nine items. Respondents were asked to indicate their level of achievement on one measure of overall performance and eight measures of specific performance dimensions. The
response scales ranged from (1) ‘‘extremely below average’’ to (5) ‘‘extremely above average.’’
IV. DATA ANALYSIS AND RESULT
Descriptive Statistics and Correlations
Table 3 presents the descriptive statistics of the variables used in this study.8 On average,
subordinates believe that they have better information than their superiors and actively participate in
8 We begin our analyses by assessing the reliability of the constructs used in this study. The results (not reported in this paper)indicate that the reliability of the constructs is within the acceptable range ( Nunnally 1967), with a minimum of 0.801 and a maximum of 0.924. We also perform a principal component factor analysis to investigate whether the multi-itemquestionnaire has dimensions that are consistent with the proposed construct in this study The results (not reported in this
40 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 13/27
the budgeting process (mean scores of 3.356 and 3.714 for Information Asymmetry and Budgetary
Participation, respectively). Subordinates also indicate that they are highly committed to their goals
(mean ¼ 4.129) and less ambiguous about their role in their organization (mean ¼ 1.819). With
respect to the outcome variables, subordinates indicate that they are satisfied with their job (mean¼3.827) and their performance is above average (mean ¼ 3.804).
Table 4 presents the Pearson correlations for all the variables used in this study. The results
indicate that Participative Budgeting is positive and significantly correlated with Goal Commitment ,
but negatively and significantly correlated with Role Ambiguity. Goal Commitment is significantly and
positively correlated with both Job Satisfaction and Performance, but negatively and significantly
correlated with Role Ambiguity. Role Ambiguity is negative and significantly correlated with both Job
Satisfaction and Performance. The two outcome variables are positive and significantly correlated.
These results provide early support for the hypotheses we developed for this study.
Hypothesis Testing
We use the structural equation modeling approach to examine the hypotheses presented in Section
II. Leach-Lopez et al. (2007) argue that this approach is superior to the multiple regression methodbecause of its ability to capture the subtleties of a phenomenon wherein the correlation between the
independent variables and the dependent variable is mediated by one or more intervening variables.
Tables 5 and 6 present the coefficients of the structural model, with Job Satisfaction and
Performance as the respective dependent variables. The structural model appeared to be a
reasonable fit for our study (i.e., v2 /df ¼ 1.48; CFI ¼ 0.901; IFI ¼ 0.903; RMSEA ¼ 0.05 for
Performance as the dependent variable, and v2 /df ¼ 1.53; CFI¼0.917; IFI¼0.918; RMSEA¼0.05
for Job Satisfaction as the dependent variable).9 See Figures 1 and 2.
TABLE 3
Descriptive Statistics
Variable Mean Std. Dev. Minimum Maximum
Information Asymmetry 3.356 0.195 1.000 5.000
Participative Budgeting 3.714 0.970 1.000 5.000
Goal Commitment 4.129 0.672 1.670 5.000
Role Ambiguity 1.819 0.524 1.000 3.670
Job Satisfaction 3.804 0.602 1.210 5.000
Performance 3.827 0.576 1.250 4.880
Variable Definitions: Information Asymmetry¼ the sum of the six-item scale developed by Dunk (1993); Participative Budgeting¼ the sum of the four-item scale developed by Vroom and Mann (1960);Goal Commitment ¼ the sum of the three-item scale developed by Latham and Steele (1983);
Role Ambiguity¼
the sum of the six-item scale developed by Rizzo et al. (1970);
Job Satisfaction ¼ the sum of the 20-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.(1967); and
Performance¼ the measurement from the nine-item scale developed by Mahoney et al. (1965).
9 Researchers have provided some guidelines in assessing the potential biases inherent in various measures whenusing the structural equation modeling approach. Wheaton et al. (1977) suggest that the Chi-squared divided bydegree-of-freedom (v2 /df ) should be lowe r than 3.00, while Steiger (1990) contends that the residual mean squareapproximation (RMSEA) should be less than 0 10 Bentler and Bonnet (1980) indicate that the comparative fit
Budgetary Participation in Turkey 41
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 14/27
H1 predicts that Information Asymmetry will have no relation to Budgetary Participation.
Panel A of Table 5 and Panel A of Table 6 both indicate that the path coefficient between
Information Asymmetry and Budgetary Participation (Path A) is positive but not significant. This
result is consistent with H1.10
Panel B of Table 5 presents the non-hypothesized path coefficients using Job Satisfaction as
the dependent variable. The results indicate that: (1) Path B ( Budgetary Participation ! Job
Satisfaction) is positive and significant, (2) Path C ( Budgetary Participation ! Goal Commitment )
is positive and significant, Path D ( Budgetary Participation
!Role Ambiguity) is negative and
significant, Path E (Goal Commitment ! Job Satisfaction) is positive but not significant, and Path F
( Role Ambiguity ! Job Satisfaction) is negative and significant.
Panel B of Table 6 presents the non-hypothesized path coefficients using Performance as the
dependent variable. The results indicate that: (1) Path B ( Budgetary Participation ! Performance)
is positive but not significant, (2) Path C ( Budgetary Participation! Goal Commitment ) is positive
and significant, Path D ( Budgetary Participation ! Role Ambiguity is negative and significant,
Path E (Goal Commitment ! Performance) is positive and significant, and Path F ( Role Ambiguity
! Performance) is negative and significant.
TABLE 4
Pearson Correlations among Variables
(n ¼ 194, p-values in parentheses)
Variable Information Asymmetry
Participative Budgeting
Goal Commitment
Role Ambiguity
JobSatisfaction Performance
Information Asymmetry 1
Participative Budgeting 0.091 1
(0.205)
Goal Commitment À0.037 0.358*** 1
(0.604 ) (0.000)
Role Ambiguity 0.071 À0.228*** À0.410*** 1
(0.324) (0.001) (0.000)
Job Satisfaction À0.170** 0.229 0.282*** À0.446*** 1
(0.018) (0.001) (0.000) (0.000)
Performance 0.125* 0.135 0.237*** À0.246*** 0.291*** 1(0.083) (0.000) (0.001) (0.001) (0.000)
*,**, *** Denote the significant level of 0.10, 0.05, and 0.01, respectively, based on two-tailed tests.
Variable Definitions:
Information Asymmetry ¼ the sum of the six-item scale developed by Dunk (1993); Participative Budgeting¼ the sum of the four-item scale developed by Vroom and Mann (1960);
Goal Commitment ¼ the sum of the three-item scale developed by Latham and Steele (1983); Role Ambiguity¼ the sum of the six-item scale developed by Rizzo et al. (1970);
Job Satisfaction ¼ the sum of the 20-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.(1967); and
Performance
¼the measurement from the nine-item scale developed by Mahoney et al. (1965).
10 The statistical power for this test is 83 percent, which is above the minimum acceptable level of 80 percent ( Ellis2010). The statistical power indicates the ability of a study to demonstrate an association or causal relationshipbetween two variables given that an association exists (Cohen 2008) For example a study with 80 percent
42 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 15/27
TABLE 5
Structural Model Path Coefficients with Job Satisfaction as the Dependent Variable
Panel A: H1—Direct Effect
Path
Standardized
Path
Coefficient
t-value
(p-value)
Path A: Information Asymmetry ! Budgetary Participation 0.094 1.118
n.s.
Panel B: Non-Hypothesized Path
Path
Standardized
Path
Coefficient
t-value
(p-value)
Path B: Budgetary Participation ! Job Satisfaction 0.117 1.091
n.s.
Path C: Budgetary Participation ! Goal Commitment 0.383*** 5.231
(, 0.001)
Path D: Budgetary Participation ! Role Ambiguity À0.228*** À2.417
(0.001)
Path E: Goal Commitment ! Job Satisfaction 0.097* 1.298
(0.079)
Path F: Role Ambiguity ! Job Satisfaction À0.422*** À3.756
(, 0.001)
Panel C: Mediating Effect
Path
Standardized
Path
CoefficientaZ-value
(p-value)b
H2a: Budgetary Participation ! Goal Commitment ! Job Satisfaction 0.037 1.120
n.s.
H3a: Budgetary Participation ! Role Ambiguity ! Job Satisfaction 0.096*** 3.569
(, 0.001)
*, *** Denote significant levels of 0.10 and 0.01, respectively, based on one-sided tests.
Fit indices: v
2
/df ¼ 1.53; CFI ¼ 0.917; IFI ¼ 0.918; RMSEA ¼ 0.05.a The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each pathinvolved.
b The Z-score is calculated using the following formula suggested by Sobel (1982): Z ¼ ðabÞ= ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi b2s2
a þ a2s2b
p , where a
and b are the standardized path coefficients of Path A and Path B, respectively, and sa and sb are the standard error of aand b, respectively.
Variable Definitions: Information Asymmetry¼ the sum of the six-item scale developed by Dunk (1993); Participative Budgeting¼ the sum of the four-item scale developed by Vroom and Mann (1960);Goal Commitment ¼ the sum of the three-item scale developed by Latham and Steele (1983);
Role Ambiguity ¼ the sum of the six-item scale developed by Rizzo et al. (1970);
Job Satisfaction ¼ the sum of the 20-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.(1967); and
Performance¼ the measurement from the nine-item scale developed by Mahoney et al. (1965).
Budgetary Participation in Turkey 43
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 16/27
TABLE 6
Structural Model Path Coefficients with Performance as the Dependent Variable
Panel A: H1—Direct Effect
Path
Standardized
Path
Coefficient
t-value
(p-value)
Path A: Information Asymmetry ! Budgetary Participation 0.097 1.157
n.s.
Panel B: Non-Hypothesized Path
Path
Standardized
Path
Coefficient
t-value
(p-value)
Path B: Budgetary Participation ! Performance 0.044 0.478
n.s.
Path C: Budgetary Participation ! Goal Commitment 0.383*** 5.249
(0.000)
Path D: Budgetary Participation ! Role Ambiguity À0.228*** À2.424
(, 0.001)
Path E: Goal Commitment ! Performance 0.178** À1.970
(0.021)
Path F: Role Ambiguity ! Performance À0.189** À2.171
(0.018)
Panel C: Mediating Effect
Path
Standardized
Path
CoefficientaZ-value
(p-value)b
H2b: Budgetary Participation ! Goal Commitment ! Performance 0.068*** 5.305
(, 0.001)
H3b: Budgetary Participation ! Role Ambiguity ! Performance 0.043** 2.389
(, 0.05)
**, *** Denote significant levels of 0.05 and 0.01, respectively, based on one-sided tests.Fit indices: v2 /df ¼ 1.48; CFI ¼ 0.901; IFI ¼ 0.903; RMSEA ¼ 0.05 for Performance.a
The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each pathinvolved.b The Z-score is calculated using the following formula suggested by Sobel (1982): Z ¼ ðabÞ=
ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi b2s2
a þ a2s2b
p , where a
and b are the standardized path coefficients of Path A and Path B, respectively, and sa and sb are the standard error of aand b, respectively.
Variable Definitions:
Information Asymmetry ¼ the sum of the six-item scale developed by Dunk (1993); Participative Budgeting¼ the sum of the four-item scale developed by Vroom and Mann (1960);Goal Commitment ¼ the sum of the three-item scale developed by Latham and Steele (1983);
Role Ambiguity¼ the sum of the six-item scale developed by Rizzo et al. (1970); Job Satisfaction ¼ the sum of the 20-item scale of Minnesota Satisfaction Questionnaires developed by Weiss et al.
(1967); and Performance
¼the measurement from the nine-item scale developed by Mahoney et al. (1965).
44 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 17/27
FIGURE 1
Structural Path Coefficients of Linking Budgetary Participation to Information Asymmetry,
Goal Commitment, Role Ambiguity, and Job Satisfaction
FIGURE 2
Structural Path Coefficients of Linking Budgetary Participation to Information Asymmetry,
Goal Commitment, Role Ambiguity, and Performance
Budgetary Participation in Turkey 45
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 18/27
To test H2, we calculate the indirect relationship between Budgetary Participation and Job
Satisfaction running through Goal Commitment . The results of this test are presented in Panel C of
Table 5. They indicate that the indirect effect of Budgetary Participation on Job Satisfaction
running through Goal Commitment (path Budgetary Participation ! Goal Commitment ! Job
Satisfaction) is positive but not statistically significant (b ¼ 0.024, Z ¼ 0.754, p ¼ 0.453).
11
Thisresult does not support H2.
To test H3, we calculate the indirect relationship between Budgetary Participation and
Performance running through Goal Commitment . Panel C of Table 6 presents the results of this
procedure. The results indicate that Goal Commitment mediates the relationship between Budgetary
Participation and Performance (path Budgetary Participation ! Goal Commitment ! Performance), which is positive and statistically significant (b ¼ 0.063, Z ¼ 2.093, p , 0.05).
This result supports H3.
To test H4, we calculate the indirect relationship between Budgetary Participation and Job
Satisfaction running through Role Ambiguity. Panel C of Table 5 shows the results of this
procedure. The results indicate that Role Ambiguity mediates the relationship between Budgetary
Participation and Job Satisfaction (path Budgetary Participation ! Role Ambiguity ! Job
Satisfaction), which is positive and statistically significant (b¼ 0.086, Z ¼ 3.096, p , 0.01). This
result supports H4.
To test H5, we calculate the indirect relationship between Budgetary Participation and
Performance running through Role Ambiguity. Panel C of Table 6 shows the results of this
procedure. The results indicate that Role Ambiguity mediates the relationship between Budgetary
Participation and Performance (path Budgetary Participation ! Role Ambiguity ! Performance),
which is positive and statistically significant (b¼ 0.047, Z¼ 2.374, p , 0.05). This result supports
H5.
V. DISCUSSIONS, LIMITATIONS, AND IMPLICATIONS FOR FUTURE RESEARCH
There is a large volume of research on budgetary participation, its antecedents, and its impact
on job satisfaction and performance in management and accounting literature. However, the
empirical findings of this abundant body of research have been inconclusive. This may in part be
due to the incomplete model that the previous studies have employed (Shields and Young 1993).
Following Shields and Young’s (1993) suggestion, we use a comprehensive model to
investigate the impact of budgetary participation on job satisfaction and performance by including
an antecedent variable ( Information Asymmetry) and two mediating variables (Goal Commitment
and Role Ambiguity). The study’s key findings are that goal commitment and role ambiguity
mediate the relationship between budgetary participation and job satisfaction, as well as therelationship between budgetary participation and performance. The significant indirect effect of
budgetary participation on job satisfaction and performance running through role ambiguity is
consistent with the result reported by Chenhall and Brownell (1988). Furthermore, the results
indicate that goal commitment mediates the relationship between budgetary participation and
performance. On the other hand, the mediating effect of goal commitment on the relationship
between budgetary participation and performance is not statistically significant. We also cannot find
any evidence that information asymmetry is an antecedent for budgetary participation in Turkey.
11 The path coefficient for the mediating effect is calculated by multiplying the standardized path coefficient of each
path involved. The Z-score is calculated using the following formula suggested by Sobel (1982): Z ¼ ab ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi b2 sa
2þa2 sb2
p ,
where a and b are the standardized path coefficients of Path A and Path B, respectively, and sa and sb are the
46 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 19/27
These results contradict the prediction of agency theory but are consistent with the values of a
paternalistic society such as Turkey. That is, superiors are like fathers to their subordinates and feel
responsible for their subordinates’ well-being, while subordinates display loyalty and respect to
them in turn. As a result, information tends to be shared informally rather than through a formal
budgeting process (Kabasakal and Bodur 1998).The results of this study should be interpreted in light of three limitations. First, we used a
questionnaire survey to collect data from our respondents. We acknowledge that responses to the
survey might be biased by participants’ desire to give socially desirable answers. This problem might
be exacerbated by the fact that the respondents’ bosses were contacted before the questionnaires were
sent to them. This procedure, however, was considered necessary because Turkish society has such a
strong family- and in-group-oriented culture. Consequently, Turkish subordinates are expected to ask
permission from their superiors before participating in any surveys conducted by outside parties.
Furthermore, Kren (1992) argues that even if the respondents’ responses appear to be more positive
than others generated by more objective measurements, there is no reason to believe that their bias
would systematically affect the relationship between the independent and dependent variables. It is
also important to note that the use of the questionnaire survey enabled us to explore a rich amount of
data that is not typically available in the public domain. Future research might examine the robustness
of our model by using publicly available data.
Second, this study was conducted among managers of semi-private companies in a developing
country (Turkey). The social and environmental characteristics of our research setting might
therefore be different from other settings. Semi-private companies tend to be significantly
influenced by governments in terms of budget formulation and implementation. This might be the
reason why we did not find a significant relationship between information asymmetry and
budgetary participation, and why budgetary participation has an indirect effect on job satisfaction
running through goal commitment. This setting, however, provides us with useful insights into the
impact of budgetary participation on job satisfaction and performance in a more controlled
environment.
Third, we only use two managers to review the questionnaire prior to administering it to the
respondents. This procedure was performed to assess the degree of understanding of the
questionnaire that was translated from English into Turkish. Given that the questionnaires were
used widely in the previous studies and the limited number of respondents available for our study,
we did not perform a pilot study using more respondents. Future study with large sample size might
consider performing a pilot study using a larger number of respondents to obtain advance warning
about where the main research project could fail, where research protocols may not be followed, or
whether proposed methods or instruments are inappropriate or too complicated.
In spite of the limitations mentioned above, this study will be beneficial for companies in
general and for organizations in developing countries in particular. It will help the latter to realize
that budgetary participation alone does not improve job satisfaction and performance. Rather, it is
the increased commitment and decreased role ambiguity that results from managers’ participation in
the budgetary process that improves job satisfaction and performance.
REFERENCES
Alam, M. 1997. Budgetary process in uncertain contexts: A study of state-owned enterprises in Bangladesh.
Management Accounting Research 8: 147–168.Balzer, W. K., J. A. Kihm, P. C. Smith, J. L. Irwin, P. D. Bachiochi, and C. Robie. 1997. User’s Manual for
the Job Descriptive Index (JDI: 1997 Revision) and the Job in General Scales. Bowling Green, OH:
Budgetary Participation in Turkey 47
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 20/27
Bentler, P. M., and D. G. Bonnet. 1980. Significance tests and goodness-of-fit in the analysis of covariance
structures. Psychological Bulletin 88: 588–600.
Bowling, N. A. 2007. Is the job satisfaction–job performance relationship spurious? A meta-analytic
examination, Journal of Vocational Behavior 71: 167–185.
Brownell, P. 1981. Participation in budgeting: Locus of control and organizational effectiveness. The
Accounting Review 56: 844–860.Brownell, P., and M. Hirst. 1986. Reliance on accounting information, budgetary participation, and task
uncertainty: Test of a three-way interaction. Journal of Accounting Research 24: 241–249.
Brownell, P., and M. McInnes. 1986. Budgetary participation, motivation, and managerial performance. The
Accounting Review 61 (4): 587–600.
Chenhall, R. 1986. Authoritarianism and participative budgeting—A dyadic analysis. The Accounting
Review 60: 263–272.
Chenhall, R., and P. Brownell. 1988. The effect of participative budgeting on job satisfaction and
performance: Role ambiguity as an intervening variable. Accounting, Organizations and Society 13:
225–234.
Chong, V. K., and D. M. Johnson. 2007. Testing a model of the antecedents and consequences of budgetary
participation on job performance. Accounting and Business Research 37 (1): 3–19.
Christensen, J. 1982. The determination of performance standards and participation. Journal of Accounting
Research (Autumn): 589–603.
Cohen, B. H. 2008. Explaining Psychological Statistics. 3rd edition. Hoboken, NJ: John Wiley & Sons.
Dakhli, A. 2010. Budgetary participation in a non-western country. Journal of Business in Developing
Nations 12: 1–31.
Douglas, P. C., H. H. Elnaby, C. S. Norman, and B. Wier. 2007. An investigation of ethical position and
budgeting systems: Egyptian managers in U.S. and Egyptian firms. Journal of International
Accounting, Auditing & Taxation 16: 90–109.
Dunk, A. 1993. The effect of budget emphasis and information asymmetry on the relation between
budgetary participation and slack. The Accounting Review 68: 400–410.
Ellis, P. D. 2010. The Essential Guide to Effect Sizes: An Introduction to Statistical Power, Meta-Analysis
and the Interpretation of Research Results. Cambridge, U.K.: Cambridge University Press.
Etemadi, H., Z. D. Dilami, M. S. Bazaz, and R. Parameswaran. 2009. Culture, management accounting and
managerial performance: Focus Iran. Advances in Accounting, Incorporating Advances in
International Accounting 25: 216–225.
Fischer, R. T. 2001. Role stress, the type a behavior pattern, and external auditor job satisfaction and
performance. Behavioral Research in Accounting 13: 143–170.
Hofstede, G. 1991. Cultures and Organizations: Software of the Mind . Berkshire, U.K.: McGraw-Hill.
Hollenbeck, J. R., and H. J. Klein. 1987. Goal commitment and the goal setting process: Problems,
prospects and proposals for future research. Journal of Applied Psychology 74: 18–23.
Hopwood, A. 1976. Accounting and Human Behavior . Englewood Cliffs, NJ: Prentice Hall.Hosen, Y. K., W. S. Hui, S. Suliman, and I. A. Rahman. 2011. The influence of culture on the relationship
between level of participation budgeting and firm performance in the context of Libya. Asian Journal
of Business Management Studies 2 (2): 84–93.
House, R., P. Hanges, A. Ruiz-Quintanilla, P. Dorfman, M. Javidan, M. Dickson, and V. Gupta. 1999.
Cultural influences on leadership and organizations: Project GLOBE. In Advances in Global
Leadership, edited by W. Mobley, 171–233. Stamford, CT: JAI Press.
Jermias, J., and T. Setiawan. 2008. The moderating effects of hierarchy and control systems on the
relationship between budgetary participation and performance. The International Journal of
Accounting 43: 268–292.
Joshi, P. L., J. Al-Mudhaki, and W. G. Bremser. 2003. Corporate budget planning, control and performance
evaluation in Bahrain. Managerial Auditing Journal 18 (9): 737–750.Kabasakal, H., and A. Dastmalchian. 2001. Introduction to the symposium on leadership and culture in the
Middle East norms, practices, and effective leadership attributes in Iran, Kuwait, Turkey, and Qatar.
48 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 21/27
Kabasakal, H., and M. Bodur. 1998. Leadership, Values, and Institutions: The Case of Turkey. Research
paper, Bogazici University.
Kabasakal, H., and M. Bodur. 2002. Arabic cluster: A bridge between East and West. Journal of World
Business 37: 40–54.
Kahn, R. L., M. Wolfe, R. P. Quinn, J. D. Snoek, and R. A. Rosenthal. 1964. Organizational Stress. New
York, NY: John Wiley & Sons.
Kirby, A., S. Reichelstein, P. Sen, and T. Paik. 1991. Participation, slack and budget-based performance
evaluation. Journal of Accounting Research (Spring): 109–128.
Klein, H. J., M. J. Wesson, J. R. Hellenbeck, P. M. Wright, and R. P. DeShon. 2001. The assessment of goal
commitment: A measurement model meta-analysis. Organizational Behavior and Human Decision
Processes 85 (1): 32–55.
Kren, L. 1992. Budgetary participation and managerial performance: The impact of information and
environmental volatility. The Accounting Review 67 (3): 511–526.
Latham, G. P., and T. P. Steele. 1983. The motivational effects of participation versus goal setting on
performance. Academy of Management 26: 406–417.
Lau, C. M., and J. Caby. 2010. The effects of national culture on the role of participation in different tasksituations. Advances in Accounting, Incorporating Advances in International Accounting 26: 128–
133.
Lau, C. M., and S. L. C. Tan. 1998. The impact of budget emphasis, participation and task difficulty on
managerial performance: A cross-cultural study of the financial services sector. Management
Accounting Research 9: 163–183.
Lau, C. M., and S. L. C. Tan. 2003. The effects of participation and job-relevant information on the
relationship between evaluative style and job satisfaction. Review of Quantitative Finance and
Accounting 21 (1): 17–34.
Lau, C. M., L. C. Low, and I. R. C. Eggleton. 1995. The impact of reliance on accounting performance
measures on job-related tension and managerial performance: Additional evidence. Accounting,
Organizations and Society 20 (5): 359–381.Lawler, E. E. 1981. Pay and Organization Development . Reading, MA: Addison-Wesley.
Leach-Lopez, M. A., W. W. Stammerjohan, and F. M. McNair. 2007. Differences in the role of job-relevant
information in the budget participation-performance relationship among U.S. and Mexican managers:
A question of culture or communication. Journal of Management Accounting Research 19: 105–136.
Locke, E. A. 1968. Toward a theory of task motivation and incentive. Organizational Behavior and Human
Performance 3: 157–189.
Locke, E. A., and D. Schweiger. 1979. Participation in decision making: One more look. In Research in
Organizational Behavior , edited by B. Staw, volume 1. Greenwich, CT: JAI Press.
Locke, E. A., and G. F. Latham. 1990. A Theory of Goal Setting and Task Performance. Englewood Cliffs,
NJ: Prentice Hall.
Locke, E. A., K. Shaw, L. Saari, and G. Latham. 1981. Goal setting and task performance: 1969–1980.
Psychological Bulletin 90: 125–152.
Mahjoub, L. B., and K. Halioui. 2012. The impact of budget participation on organizational performance
via competitiveness. International Journal of Contemporary Business Studies 3 (6): 38–49.
Mahoney, T. A., T. H. Jerdee, and S. J. Carroll. 1965. The jobs of management. Industrial Relationships 4:
97–110.
Maiga, A. S. 2005. Antecedents and consequences of budget participation. Advances in Management
Accounting 14: 211–231.
Milani, K. 1975. Budget setting, performance and attitudes. The Accounting Review 50 (2): 274–284.
Murray, D. 1990. The performance effects of participative budgeting: An integration of intervening and
moderating variables. Behavioral Research in Accounting 2 (2): 104–123.Nasser, M., O. Mah’d, K. Nimer, and S. Al-okdeh. 2011. The impacts of managers’ related variables and
department features on budget characteristics: The case of private Jordanian universities.
Budgetary Participation in Turkey 49
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 22/27
Noor, I. H. B. M., and R. Othman. 2012. Budgetary participation: How it affects performance and
commitment. Accountancy Business and the Public Interest 1: 53–73.
Nouri, H., and R. J. Parker. 1996. The effect of organizational commitment on the relation between
budgetary participation and budgetary slack. Behavioral Research in Accounting 8: 74–90.
Nunnally, J. E. 1967. Psychometric Theory. New York, NY: McGraw-Hill.
Parker, R. J., and L. Kyj. 2006. Vertical information sharing in the budgeting process. Accounting,Organizations and Society 31: 27–45.
Rizzo, J. R., R. J. House, and S. I. Lirtzman. 1970. Role conflict and ambiguity in complex organizations.
Administrative Science Quarterly 15: 150–163.
Shields, J. F., and M. D. Shields. 1998. Antecedents of participative budgeting. Accounting, Organizations
and Society 23 (1): 49–76.
Shields, M. D., and S. M. Young. 1993. Antecedents and consequences of participative budgeting:
Evidence of the effects of asymmetrical information. Journal of Management Accounting Research 5:
265–280.
Sobel, M. E. 1982. Asymptotic confidence intervals for indirect effects in structural equations model. In
Sociological Methodology, edited by S. Leinhard. San Francisco, CA: Jossey-Bass.
Steiger, J. H. 1990. Structural model evaluation and modification: An interval estimation approach. Multivariate Behavioral Research 25: 173–180.
Sumer, H. C. 2000. A historical and cultural approach to analyzing performance appraisal (in Turkish). In
Management, Leadership and Human Resource Practices in Turkey, edited by Z. Aycan, 57–90.
Ankara, Turkey: Turkish Psychological Association.
Topaloglu, B. 1983. Women in Islam. In Turkish. Istanbul, Turkey: Yagmur Yayinevi.
Uddin, S., and T. Hopper. 2001. A Bangladesh soap opera: Privatization, accounting and regime of control
in a less-developed country. Accounting, Organizations and Society 26: 643–672.
Vroom, V. H., and F. C. Mann. 1960. Leader authoritarianism and employee attitudes. Personnel
Psychology 13: 125–140.
Watanabe, Y. 2010. Emerging Equity Markets and Its Integration. Working paper, Kochi University of
Technology.Weiss, D. J., R. V. Dawis, G. W. England, and I. H. Lofquist. 1967. Manual for the Minnesota Satisfaction
Questionnaire. Volume 22. Minneapolis, MN: Minnesota Studies in Vocational Rehabilitation.
Wentzel, K. 2002. The influence of fairness perceptions and goal commitment on managers’ performance in
a budget setting. Behavioral Research in Accounting 14: 247–271.
Wheaton, B., B. Muthen, D. Alwin, and G. Summers. 1977. Assessing reliability and stability in panel
models. In Sociological Methodology, edited by D. Heise. San Francisco, CA: Jossey-Bass.
Wu, L., and I. J. Norman. 2006. An investigation of job satisfaction, organizational commitment and role
conflict and ambiguity in a sample of Chinese undergraduate nursing students. Nurse Education
Today 26 (4): 304–314.
50 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 23/27
APPENDIX A
Questionnaires
A. Respondent’s Information
B. Information Asymmetry (1¼My superior has much better information; 5¼ I have much
better information)
1. In comparison with your superior, who is in possession of better information regarding the
activities undertaken in your area of responsibility?
1 2 3 4 5
2. In comparison with your superior, who is more familiar with the input-output relationships
inherent in the internal operations of your area of responsibility?
1 2 3 4 5
3. In comparison with your superior, who is more certain of the performance potential of your
area of responsibility?
1 2 3 4 5
4. In comparison with your superior, who is more familiar technically with the work of your
area of responsibility?
1 2 3 4 5
5. In comparison with your superior, who is better able to assess the potential impact on your
activities of factors external to your area of responsibility?
1 2 3 4 5
6. In comparison with your superior, who has a better understanding of what can be achieved
in your area of responsibility?
1 2 3 4 5
C. Budgetary Participation (1
¼Strongly disagree; 5
¼Strongly agree)
1. I participate in setting the budgets for my organizational unit.
Budgetary Participation in Turkey 51
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 25/27
2. The chance to work alone on the job.
1 2 3 4 5
3. The chance to do different things.
1 2 3 4 5
4. The chance to be somebody in the community.
1 2 3 4 5
5. Being able to do things that do not go against one’s conscience.
1 2 3 4 5
6. The way one’s job provides for steady employment.
1 2 3 4 5
7. The chance to do things for other people.
1 2 3 4 5
8. The chance to tell other people what to do.
1 2 3 4 5
9. The chance to do something that makes use of one’s abilities.
1 2 3 4 5
10. The freedom to use one’s own judgment.
1 2 3 4 5
11. The chance to try one’s own methods of doing the job.
1 2 3 4 5
12. The feeling of accomplishment one gets from the job.
1 2 3 4 5
13. The chances for advancement on the job.
1 2 3 4 514. The way company policies are put into practice.
1 2 3 4 5
15. The way one’s co-workers get along with each other.
1 2 3 4 5
16. The praise one gets for doing a good job.
1 2 3 4 5
17. The working conditions.
1 2 3 4 5
Budgetary Participation in Turkey 53
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 26/27
18. The pay and the amount of work one does.
1 2 3 4 5
19. The way one’s boss handles his/her employees.
1 2 3 4 5
20. The competence of one’s supervisor in making decisions.
1 2 3 4 5
G. Managerial Performance (1 ¼ Very below average; 5 ¼ Very above average)
1. Planning: Determining goals and courses of action; work scheduling, budgeting, setting up
procedures, programming.
1 2 3 4 5
2. Investigating: Collecting and preparing information for records, reports, and accounts;
measuring output; inventorying, job analysis.
1 2 3 4 5
3. Coordinating: Exchanging information with people in other organizational units in order to
relate and adjust programs; advising other departments, liaison with other managers.
1 2 3 4 5
4. Evaluating: Assessment and appraisal of proposals or of reported or observed performance;
employee appraisals, judging output records, judging financial reports; product inspection.
1 2 3 4 5
5. Supervising: Directing, leading, and developing your subordinates; counseling, training,
and explaining work rules to subordinates; assigning work and handling complaints.
1 2 3 4 5
6. Staffing: Maintaining the work force of your unit; recruiting, interviewing, and selecting
new employees; placing, promoting, and transferring employees.
1 2 3 4 5
7. Negotiating: Purchasing, selling, or contracting for goods or services, contacting suppliers,
dealing with sales representatives; collective bargaining.
1 2 3 4 5
8. Representing: Attending conventions, consultation with other firms, business club meetings,
public speeches, community drives; advancing the general interests of your organization.
1 2 3 4 5
9. Overall performance: Includes all of the areas listed above.
1 2 3 4 5
54 Jermias and Yigit
7/27/2019 Jermias and Yigit, 2013
http://slidepdf.com/reader/full/jermias-and-yigit-2013 27/27
Copyright of Journal of International Accounting Research is the property of American Accounting Association
and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright
holder's express written permission. However, users may print, download, or email articles for individual use.