The Importance of Manager Participation in Budgeting

Oct 13, 2025 by wbrum.org 17 views

The Effect of Manager Participation in Budgeting on Managerial Performance: The Role of Budgeribarry Slack at the Office of Directors of PT. Nusantara Plantation Region of North Sumatra

In the realm of accounting research, the relationship between manager participation in the budgeting process and managerial performance has been a topic of interest for many scholars. However, the results of previous studies have shown varying outcomes, indicating that other factors may moderate this relationship. This study aims to investigate the effect of Budgeribarry Slack as a moderating variable on the relationship between manager participation in budgeting and managerial performance.

The Importance of Manager Participation in Budgeting

Manager participation in the budgeting process is a crucial aspect of organizational performance. It involves the active involvement of managers in the budgeting process, which can lead to better decision-making and more effective resource allocation. Research has shown that manager participation in budgeting can have a positive impact on organizational performance, as it can lead to increased motivation, improved communication, and better alignment of goals and objectives.

The Role of Budgeribarry Slack

Budgeribarry Slack refers to the difference between the budget proposed by the manager and the actual performance expected. Managers tend to create budgetary slack to create "space for motion" for them in achieving the targets set. This can be interpreted as a form of protection for managers from the potential failure to achieve the target, but can also have a negative impact on organizational performance because it can reduce motivation and efficiency.

The Contingency Approach

This research uses a contingency approach to understand how the relationship between manager participation and managerial performance is influenced by other factors, namely Budgetary Slack. The contingency approach states that the relationship between variables is not always linear, but is influenced by contextual factors. In this study, the contingency approach is used to examine the moderating effect of Budgetary Slack on the relationship between manager participation in budgeting and managerial performance.

Methodology

This study involved 60 managers at the office of the Board of Directors of PT. Nusantara Perkebunan North Sumatra Region. Data was collected through a questionnaire with 4 items for participation variables as independent variables, 8 items for managerial performance as dependent variables, and 6 items for Budgetary Slack as moderating variables. The census method is applied with a questionnaire returns reaching 80%, which is 48 of 60 respondents. Moderate regression analysis is applied to test moderating effects based on complete answers from 46 managers.

Results

The results of this study produce four findings in accordance with the proposed hypothesis. First, manager participation in budgeting has a significant effect on managerial performance. Second, Budgeribarry Slack has a significant effect on managerial performance. Third, manager's participation in budgeting and Budgetary Slack simultaneously has a significant effect on managerial performance. Finally, no interactive effect was found between manager participation in budgeting and Budgery Slack on managerial performance.

Implications

These findings have important implications for management practices at PT. Nusantara Perkebunan North Sumatra Region. Increasing manager participation in the budgeting process can improve managerial performance. However, it is essential to remember that Budgeribarry Slack also has a significant influence on managerial performance. Therefore, management needs to pay attention to the level of budgetary slack that exists and manage so that it is not too high or too low.

Conclusion

This study provides empirical evidence of the significant effects of manager participation in budgeting and Budgery Slack on managerial performance. However, the interactive effect between the two variables was not found. The results of this study have practical implications for management at PT. Nusantara Perkebunan North Sumatra Region in Improving Organizational Performance through Effective Participatory Budgeting and Control of Budgetary Slack.

Recommendations

Based on the findings of this study, the following recommendations are made:

Increase manager participation in the budgeting process, but still pay attention to the level of Budgetary Slack.
Building an effective supervision and control system to minimize the potential for abuse of Budgetary Slack.
Provide fair incentives and appreciation to managers who show good performance.

Limitations

This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the study only examines the relationship between manager participation in budgeting and managerial performance in one organization, which may not be representative of other organizations. Finally, the study only examines the moderating effect of Budgetary Slack on the relationship between manager participation in budgeting and managerial performance, and does not examine other potential moderating variables.

Future Research Directions

This study provides a foundation for future research on the influence of Budgery Slack in various organizational contexts. Future research can examine the moderating effect of Budgetary Slack on the relationship between manager participation in budgeting and managerial performance in other organizations. Additionally, future research can examine the impact of Budgetary Slack on organizational performance in different industries and contexts.

Conclusion

In conclusion, this study provides empirical evidence of the significant effects of manager participation in budgeting and Budgery Slack on managerial performance. The findings of this study have practical implications for management at PT. Nusantara Perkebunan North Sumatra Region in Improving Organizational Performance through Effective Participatory Budgeting and Control of Budgetary Slack.
Q&A: The Effect of Manager Participation in Budgeting on Managerial Performance

In our previous article, we discussed the effect of manager participation in budgeting on managerial performance, with a focus on the role of Budgeribarry Slack as a moderating variable. Here, we answer some frequently asked questions (FAQs) related to this topic.

Q: What is the significance of manager participation in budgeting?

A: Manager participation in budgeting is a crucial aspect of organizational performance. It involves the active involvement of managers in the budgeting process, which can lead to better decision-making and more effective resource allocation.

Q: What is Budgeribarry Slack, and how does it affect managerial performance?

A: Budgeribarry Slack refers to the difference between the budget proposed by the manager and the actual performance expected. Managers tend to create budgetary slack to create "space for motion" for them in achieving the targets set. This can have a negative impact on organizational performance because it can reduce motivation and efficiency.

Q: How does the contingency approach relate to this study?

A: The contingency approach is used to understand how the relationship between manager participation and managerial performance is influenced by other factors, namely Budgetary Slack. This approach states that the relationship between variables is not always linear, but is influenced by contextual factors.

Q: What are the implications of this study for management practices?

A: The findings of this study have important implications for management practices at PT. Nusantara Perkebunan North Sumatra Region. Increasing manager participation in the budgeting process can improve managerial performance. However, it is essential to remember that Budgeribarry Slack also has a significant influence on managerial performance.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the study only examines the relationship between manager participation in budgeting and managerial performance in one organization, which may not be representative of other organizations. Finally, the study only examines the moderating effect of Budgetary Slack on the relationship between manager participation in budgeting and managerial performance, and does not examine other potential moderating variables.

Q: What are the future research directions for this study?

A: This study provides a foundation for future research on the influence of Budgery Slack in various organizational contexts. Future research can examine the moderating effect of Budgetary Slack on the relationship between manager participation in budgeting and managerial performance in other organizations. Additionally, future research can examine the impact of Budgetary Slack on organizational performance in different industries and contexts.

Q: How can managers and organizations apply the findings of this study?

A: Managers and organizations can apply the findings of this study by increasing manager participation in the budgeting process, while also paying attention to the level of Budgetary Slack. Additionally, they can build an effective supervision and control system to minimize the potential for abuse of Budgetary Slack. Finally, they can provide fair incentives and appreciation to managers who show good performance.

Q: What are the practical implications of this study for management at PT. Nusantara Perkebunan North Sumatra Region?

A: The findings of this study have practical implications for management at PT. Nusantara Perkebunan North Sumatra Region in Improving Organizational Performance through Effective Participatory Budgeting and Control of Budgetary Slack.

Q: Can the findings of this study be generalized to other organizations?

A: While the findings of this study are specific to PT. Nusantara Perkebunan North Sumatra Region, they can be generalized to other organizations that have similar characteristics and contexts.

Q: What are the potential risks and challenges associated with increasing manager participation in budgeting?

A: Increasing manager participation in budgeting can lead to several potential risks and challenges, including the potential for abuse of Budgetary Slack, decreased motivation and efficiency, and increased complexity in the budgeting process.

Q: How can organizations mitigate the potential risks and challenges associated with increasing manager participation in budgeting?

A: Organizations can mitigate the potential risks and challenges associated with increasing manager participation in budgeting by building an effective supervision and control system, providing fair incentives and appreciation to managers, and ensuring that managers have the necessary skills and knowledge to participate effectively in the budgeting process.