DO LEADERSHIP STYLES MODERATE THE RELATIONSHIP OF ORGANIZATIONAL COMMITMENT AND BUDGETARY SLACK? AN EXPERIMENTAL APPROACH
https://doi.org/10.22146/jieb.32285 Imas Nurani Islami(1*), Ertambang Nahartyo(2)
(1) Department of Accounting, Faculty of Business, President University
(2) Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada
(*) Corresponding Author
Abstract
Introduction: this study aims to provide empirical evidence of the factors that can mitigate and encourage budgetary slack. Specifically, this study examines the effect of affective organizational commitment on budgetary slack with the style of leadership as a moderating variable. Background Problems: budgetary slack is an unethical action that often occurs in companies and little attention is given to companies that experience losses, especially when it is related to the suboptimal allocation of resources. Novelty: Previous studies paid little attention to the direct relationship between affective organizational commitment and budgetary slack. They were limited to investigating the correlation between affective organizational commitment and budgetary slack. This study provides evidence of causality between the two and includes the style of leadership as a moderating factor. Research Methods: This research is conducted through an experimental approach using a 2 x 2 between-subjects design. The participants of this research are 64 from the Master of Management (MM) program at Gadjah Mada University (UGM). Findings: The result of this study indicates that middle managers with high affective organizational commitment create a smaller budgetary slack than the middle managers with low affective organizational commitment. However, the leadership style is not proven to moderate the relationship between affective organizational commitment and budgetary slack. Conclusion: These findings provide theoretical evidence of the self-determination theory that an individual with high affective organizational commitment creates a smaller budgetary slack than an individual with low affective organizational commitment. Therefore, companies need to pay more attention to their employees’ commitment.
Keywords
Full Text:
PDFReferences
Abernethy, M. A., Bouwens, J., & van Lent, L. (2010). Leadership and control system design. Management Accounting Research, 21(1), 2-16.
Anthony, R. N., & Govindarajan, V. (2007). Management control systems (12th ed.). New York: McGraw-Hill.
Ashton, R. H., & Kramer, S. S. (1980). Students as surrogates in behavioral accounting research: Some evidence. Journal of Accounting Research, 18(1), 1-15.
Bandura. (1971). Social learning theory. New York: General Learning Press.
Brahmayanti, S., & Sholihin, M. (2006). Pengaruh reputasi dalam hubungan antara asimetri informasi dengan senjangan anggaran di bawah metode kompensasi truth inducing. Jurnal Ekonomi dan Bisnis Indonesia, 21(2), 175-185.
Brownell, P. (1983). Leadership style, budgetary participation and managerial behavior. Accounting,Organizations and Society, 8(4), 307-321.
Ceri-Booms, M., Curşeu, P. L., & Oerlemans, L. A. (2017). Task and person-focused leadership behaviors and team performance: A meta-analysis. Human Resource Management Review, 27(1), 178-192.
Chong, V. K., & Loy, C. Y. (2015). The effect of a leader’s reputation on budgetary slack. Advances In Management Accounting, 25, 49-102.
Chow,C. W. (1983). The effect of job standard tightness and compensation scheme on performance: An exploration of linkages. Journal of The Accounting Review, 58(4), 667-685.
Chow, C. W., Cooper J. C., & Waller, W. S. (1988). Participative budgeting: Effects of a truth inducing pay scheme and information asymmetry on slack and performance. Accounting Review, 63(1), 111-122.
Chow, C. W., Cooper, J. C., & Haddad, K. (1991). The effect of pay schemes and ratchets on budgetary slack and performance: A multi-period experiment. Accounting, Organizations and Society, 16(1), 47-60.
Dale, K., & Fox, M. L. (2008). Leadership style and organizational commitment: Mediating effect of role stress. Journal of Managerial Issues, 20(1), 109-130.
Davis, S., DeZoort, F. T., & Kopp, L. S. (2006). The effect of obedience pressure and perceived responsibility on management accountants' creation of budgetary slack. Behavioral Research in Accounting, 18(1), 19-35.
De Baerdemaeker, J., & Bruggeman, W. (2015). The impact of participation in strategic planning on managers’ creation of budgetary slack: The mediating role of autonomous motivation and affective organisational commitment. Management Accounting Research, 29, 1-12.
De Vries, R. E., Bakker-Pieper, A., & Oostenveld, W. (2010). Leadership = communication styles? The relation of leaders’ communication styles with leadership styles, knowledge sharing and leadership outcomes. Journal Business Psychology, 25(3), 367-380.
Fernandez, S. (2008). Examining the effects of leadership behavior on employee perceptions of performance and job satisfaction. Public Performance and Management Review, 32(2), 175-205.
Fisher, J. G., Maines, L. A., Peffer, S. A., & Sprinkle, G. B. (2002b). Using budgets for performance evaluation: effects of resource allocation and horizontal information asymmetry on budget proposals, budget slack, and performance. The Accounting Review, 77(4), 847-865.
Fisher, J., Frederickson, J. R., & Peffer, S. A. (2002a). The effect of information asymmetry on negotiated budgets: An empirical investigation. Accounting, Organizations and Society, 27(1/2), 27-43.
Fleishman, E. A., & Harris, E. F. (1962). Patterns of leadership behavior related to employee grievances and turnover. Personnel Psychology, 15(1), 43-56.
Gago-Rodríguez, S., & Naranjo-Gil, D. (2016). Effects of trust and distrust on effort and budgetary slack: An experiment. Management Decision, 54(8), 1908-1928.
Ghozali, I. (2011). Aplikasi analisis multivariate dengan program IBM SPSS 19 (Edisi 5). Semarang: Badan Penerbit Universitas Diponegoro.
Grediani, E., & Sugiri, S. (2010). Pengaruh tekanan ketaatan dan tanggungjawab persepsian pada penciptaan kesenjangan anggaran. Simposium Nasional Akuntansi XIII. Universitas Jenderal Sudirman, Purwokerto.
Gudono. (2015). Analisis data multivariat (Edisi 4). Yogyakarta: BPFE.
Hartmann, F., & Kramer, S. (2014). How top-down and bottom-up budgeting affect budget slack and performance through social and economic exchange. A Journal of Accounting Finance and Business,50(3), 314-340.
Hartmann, F., Naranjo-Gil, D., & Parego, P. (2010). The effects of leadership styles and use of performance measures on managerial work-related attitudes. European Accounting Review, 19(2), 275-310.
Hobson, J. L., Mellon, M. J., & Stevens, D. E. (2011). Determinants of moral judgments regarding budgetary slack: An experimental examination of pay scheme and personal values. Behavioral Research in Accounting, 23(1), 87-107.
Holtz, B. C., & Harold, C. M. (2013). Effects of leadership consideration and structure on employee perceptions of justice and counterproductive work behavior. Journal of Organizational Behavior, 34(4), 492-519.
Huang, C. L., & Chen, M. L. (2010). Playing devious games, budget-emphasis in performance evaluation, and attitudes towards the budgetary process. Management Decision, 48(6), 940-951.
Irfan, M., Santoso, B., & Effendi, L. (2016). Pengaruh partisipasi anggaran terhadap senjangan anggaran dengan asimetri informasi, penekanan anggaran dan komitmen organisasional sebagai variabel pemoderasi. Jurnal Akuntansi dan Investasi, 17(2), 158-175.
Kahar, S. H., Rohman, A., & Chariri, A. (2016). Participative budgeting, budgetary slack and job satisfaction in the public sector. Journal of Applied Business Research (JABR), 32(6), 1663-1674.
Ketchand,A. A., & Strawser, J. R. (2001). Multiple dimensions of organizational commitment: Implications for future accounting research. Behavioral Research In Accounting, 13(1), 221-251.
Kleine, C., & Weißenberger, B. E. (2014). Leadership impact on organizational commitment: The mediating role of management control systems choice. Journal of Management Control, 24(3), 241-266.
Kohlmeyer, J. M., III., Mahenthiran, S., Parker, R. J., & Sincich, T. (2014). Leadership, budget participation, budgetary fairness, and organizational commitment. Advances in Accounting Behavioral Research, 17, 95-118.
Kreitner, R., & Kinicki, A. (2008). Organizational Behavior (8th Ed.). New York: McGraw-Hill.
Kung, F. H., Huang, C. L., & Cheng, C. L. (2013). An examination of the relationships among budget emphasis, budget planning models and performance. Management Decision, 51(1), 120-140.
Kyj, L., & Parker, R. J. (2008). Antecedents of budget participation: leadership style, information asymmetry, and evaluative use of budget. A Journal of Accounting Finance and Business, 44(4), 423-442.
Lau, C. M., & Moser, A. (2008). Behavioral effects of nonfinancial performance measures: The role of procedural fairness. Behavioral Research in Accounting, 20(2), 55-71.
Leroy,H., Palanski, M. E., & Simons, T. (2012). Authentic leadership and behavioral integrity as drivers of follower commitment and performance. Journal of Business Ethics, 107(3), 255-264.
Maiga, A. S., & Jacobs, F. A. (2008). The moderating effect of manager’s ethical judgment on the relationship between budget participation and budgetary slack. Advances in Accounting, 23(07), 113-145.
Merchant, K. A. (1985). Budgeting and the propensity to create budgetary slack. Accounting, Organizations and Society, 10(2), 201-210.
Meyer, J. P., & Allen, N. J. (1991). A three-component model conceptualization of organizational commitment. Human Resource Management Review, 1(1), 61-89.
Meyer, J. P., &Maltin, E. R. (2010). Employee commitment and well-being: A critical review, theoretical framework and research agenda. Journal of Vocational Behavior, 77(2), 323-337.
Meyer, J. P., Stanley, D. J., Herscovitch, L., & Topolnytsky, L. (2002). Affective, continuance, and normative commitment to the organization: A meta-analysis of antecedents, correlates, and consequences. Journal of Vocational Behavior, 61(1), 20-52.
Mowday, R. T., Steers, R. M., & Porter, L. W. (1979). The measurement of organizational commitment. Journal of Vocational Behavior, 14(2), 224-247.
Murtin, A., & Septiadi, T. B. (2012). Pengaruh partisipasi anggaran dan kejelasan sasaran anggaran terhadap budgetary slack dengan informasi asimetri, komitmen organisasi, dan budget emphasis sebagai variabel pemoderasi. Jurnal Akuntansi dan Investasi, 12(2), 175-184.
Nahartyo, E. (2013). Desain dan implementasi riset eksperimen: (Edisi 2). Yogyakarta: UPP STIM YKPN.
Nahartyo, E., & Utami, I. (2016). Panduan praktis riset eksperimen. Jakarta: PT. Indeks.
Neubert, M. J., Kacmar, K. M., Carlson, D. S., & Chonko, L. B. (2008). Regulatory focus as a mediator of the influence of initiating structure and servant leadership on employee behavior. Journal of Applied Psychology, 93(6), 1220-1233.
Nouri, H., & Kyj, L. (2015). Examination of the combined effects of normative and instrumental commitments on budgetary slack creation: Comparing individuals versus group members. Advances In Management Accounting, 22, 225-260.
Nouri, H., & Parker, R. J. (1996). The effect of organizational commitment on the relation between budgetary participation and budgetary slack. Behavioral Research in Accounting, 8, 74-90.
Porter, L. W., Steers, R. M., Mowday, R. T., & Boulian, P. V. (1974). Organizational commitment, job satisfaction, and turnover among psychiatric technicians. Journal of Applied Psychology, 59(5), 603-609.
Rosdini, D. (2016). Shared financial interest, fairness, and honesty in budget reporting: Experimental study in Indonesia. Review of Integrative Business & Economics Research, 5(3), 266-282.
Rousseau, V., & Aubé, C. (2010). Social support at work and affective commitment to the organization: The moderating effect of job resource adequacy and ambient conditions. The Journal of Social Psychology, 150(4), 321-340.
Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist,55(1), 68-78.
Stevens, D. E. (2002). The effects of reputation and ethics on budgetary slack. Journal of Management Accounting Research, 14(1), 153-171.
Stogdill, R. M., &Coons, A. E. (1957). Leader behavior: Its description and measurement. Columbus bureau of business research. Columbus: Ohio State University.
Van der Stede, W. A. (2000). The Relationship Between Two Consequences of Budgetary Controls: Budgetary slack creation and managerial short-term orientation. Accounting, Organizations and Society, 25, 609-622.
Wallace, E., de Chernatony, L., & Buil, I. (2011). How leadership and commitment influence bank employees’ adoption of their bank’s values. Journal of Business Ethics, 101(3), 397-414.
Wallace, E., de Chernatony, L., & Buil, I. (2013). Building Bank Brands: How leadership behavior influences employee commitment. Journal of Business Research, 66(2), 165-171.
Widanaputra, A.A., & Mimba, N.P.S.H. (2014). The influence of participative budgeting on budgetary slack in composing local governments’ budget in Bali Province. Procedia-Social and Behavioral Sciences, 164, 391-396.
Widyaningsih, A. (2011). Moderasi gaya kepemimpinan atas pengaruh partisipasi anggaran terhadap budgetary slack. Fokus Ekonomi, 6(1), 1-18.
Wong-On-Wing, B., Guo, L., & Lui, G. (2010). Intrinsic and extrinsic motivation and participation in budgeting: Antecendents and consequences. Behavioral Research in Accounting, 22(2), 133-153.
Young, S. M. (1985). Participative budgeting: The effects of risk aversion and asymmetric information on budgetary slack. Journal of Accounting Research, 23(2), 829-842.
Yukl, G. (1989). Managerial leadership: A review of theory and research. Journal of Management, 15(2), 251-289.
Yukl, G. (2010). Leadership in organizations (7th Ed.). New York: Pearson Prentice Hall.
DOI: https://doi.org/10.22146/jieb.32285
Article Metrics
Abstract views : 3727
| 
views : 3389
Refbacks
- There are currently no refbacks.
Copyright (c) 2019 Journal of Indonesian Economy and Business
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
| Journal of Indonesian Economy and Business |
| The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License |
| © 2019 Journal of Indonesian Economy and Business | Visitor Statistics |