The Performance Effects of Participative Budgeting: An Integration of Intervening and Moderating Variables

Dennis Murray
This paper has two objectives. First, a structural model of the relationship between participative budgeting and performance is presented. This model is based on Locke's [1968] goal theory and is consistent with, but somewhat more detailed than, those models which have typically appeared in the accounting literature. Second, based on the intervening linkages contained in the structural model, variables that may moderate the effect of participation on performance are identified. This integration of intervening and moderating variables provides a fuller understanding of how and when participative budgeting works. Accordingly, it can serve as a basis for normative recommendations regarding the use of participative budgeting in various managerial settings and be used to identify issues for future research.

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