Participative budgeting: a review of empirical research and practical implications Online publication date: Sat, 07-Mar-2015
by Philipp Prummer, Patricia Frey, Peter Schentler, H. James Williams, Jaideep Motwani
International Journal of Business Innovation and Research (IJBIR), Vol. 5, No. 5, 2011
Abstract: The process by which managers have influence on the setting of their budget goals, participative budgeting (PB), has been researched extensively since the 1960s. This paper provides a comprehensive and critical review of the empirical PB literature, which still lacks such a detailed and broad-scope examination, derives practical recommendations and implications, and gives a comparison of the findings of PB literature and the principles of recent budgeting concepts. The empirical PB studies identified (1) the antecedents or determinants of PB, (2) the impact PB has on mental states and performance and (3) PB's effects on the existence of budgetary slack. Summing up the findings, it has to be noted that while the informational role of PB in enhancing subordinate performance is generally established, the results relating to reductions in information asymmetry as well as PB's motivational effects remain ambiguous.
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