Accounting Organizationsand Society,Vol. 13, No. 5, pp. 465-475, 1988. 0361-3682/88 $3.00+.

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Printed in Great Britain Pergamon Press plc

MANAGERIAL ATTITUDE, MOTIVATION AND THE EFFECTIVENESS

OF BUDGET PARTICIPATION*

LOKMAN MIA
Department of Accounting and Finance, University of Tasmania

Abstract
This study empirically examined the effect of budget participation on managerialperformance tgsinga con-
tingency theory approach. Contingent variables investigated included managerial attitude (towards their
job and company) and motivation (to work). The results indicated that both variablesmoderated the effect
of budget participation. Specifically,participation in the budgeting process by managers who reported a
more favourable attitude or motivation, was associated with improved performance; whereas participation
by managers exhibiting a less favourable attitude or motivation, was associated with hampered perform-
ance. These results support the fundamental argument that an organization may be better off following a
budgeting style (participative or non-participative) that is congruent with its employee attitude and moti-
vation.

A n u m b e r of studies have i n v e s t i g a t e d the rela- o t h e r hand, b u d g e t p a r t i c i p a t i o n b y m a n a g e r s

t i o n s h i p b e t w e e n b u d g e t p a r t i c i p a t i o n a n d per-
f o r m a n c e ( B r o w n e l l & McInnes, 1986; Brow-
nell, 1981, 1982; Kenis, 1979; Milani, 1975;
Meyer, 1970); h o w e v e r , the e x a c t n a t u r e of the
r e l a t i o n s h i p r e m a i n s unclear, as the results re-
p o r t e d b y p r e v i o u s studies have b e e n i n c o n c l u -
sive a n d o f t e n c o n t r a d i c t o r y . O n e w a y to r e c o n -
cile these c o n f l i c t i n g results is to investigate the
h y p o t h e s i s e d r e l a t i o n s h i p utilising a c o n t i n -
g e n c y t h e o r y a p p r o a c h ( G o v i n d a r a j a n , 1986).
This a p p r o a c h i n v o l v e s a c c e p t i n g t h e idea that
the n a t u r e o f the r e l a t i o n s h i p i n q u e s t i o n m a y
vary f r o m o n e s i t u a t i o n to another.
In the p r e s e n t s t u d y a c o n t i n g e n c y t h e o r y
a p p r o a c h was a d o p t e d to evaluate t h e effective-
ness ( i n t e r m s of m a n a g e r i a l p e r f o r m a n c e ) of
b u d g e t participation. T h e c o n t i n g e n t variables
i n v e s t i g a t e d i n c l u d e d m a n a g e r i a l attitude a n d
motivation. T h e results i n d i c a t e d that b u d g e t
participation by managers who reported a more
favourable attitude a n d / o r m o t i v a t i o n d e o
m o n s t r a t e d i m p r o v e d p e r f o r m a n c e . O n the
w h o e x h i b i t e d a less favourable a t t i t u d e a n d / o r
motivation demonstrated hampered perform-
ance.
T h e n e x t s e c t i o n draws u p o n p r e v i o u s litera-
t u r e to d e v e l o p a t h e o r e t i c a l f r a m e w o r k l i n k i n g
the variables of i n t e r e s t i n o r d e r to p r o v i d e the
basis for the h y p o t h e s e s s u m m a r i z e d thereafter.
T h e r e s e a r c h m e t h o d , results a n d d i s c u s s i o n are
p r e s e n t e d in s u b s e q u e n t sections.
THEORY DEVELOPMENT: BUDGET PARTICI-
PATION AND PERFORMANCE
T h e results of p r e v i o u s studies o n the relation-
ship b e t w e e n b u d g e t p a r t i c i p a t i o n and mana-
gerial p e r f o r m a n c e have b e e n equivocal. Some
studies have r e p o r t e d a positive, significant rela-
t i o n s h i p b e t w e e n b u d g e t p a r t i c i p a t i o n a n d per-
f o r m a n c e (BrowneR, 1981, 1982; Schuler &
Kim, 1979; Bass & Leavitt, 1963; Becker &
Green, 1962), w h e r e a s o t h e r studies o b s e r v e d

*I am indebted to Ken Ferris, Southern Methodist University,Ferdinand Gul,WollongongUniversityand Ron Weber, Queens-
land Universityfor their help in revising and developing the paper. Comments by Peter BrowneU,Macquarie University,Rob
Chenhall, La Trobe University,Ken Moores, Otago University and by the participants at the AAANZconference (1985) on
an earlier version of the paper are acknowledged. I am also indebted to the anonymous reviewers for their helpful comments
and advice on earlier,drafts of the paper.
465
466 LOKMAN MIA
no differences in performance b e t w e e n par-
ticipatively and non-participatively set budgets
(Kenis, 1979; Ivancevich, 1976; Steers, 1979;
Milani, 1975; Foran & Decoster, 1974). Adding
confusion, some studies have even reported a
negative relationship b e t w e e n participation and
performance, suggesting that authoritarian goal
setting may lead to performance superior to that
associated with participative goal setting (e.g.
Blumenfield & Leidly, 1969; Bryan & Locke,
1967; Stedry, 1960; Morse & Reimer, 1956).
A problem facing researchers in this area is
therefore a need to reconcile these conflicting
results. One way of doing this is to adopt a con-
tingency theory approach. Govindarajan
(1986), for example, used environmental uncer-
tainty as a contingent variable in evaluating the
relationship b e t w e e n budget participation and
performance. He reported that increased partici-
pation improved performance in environmen-
tally highly uncertain situations, but h a m p e r e d
performance in low uncertain situations. Brow-
nell ( 1 9 8 1 ) found that increased participation
by employees w h o w e r e "internals" ( o n the
locus of control scale) resulted in improved per-
formance, whereas participation b y employees
w h o w e r e "externals" ( o n the same scale) ham-
pered performance. Similarly, Hofstede ( 1 9 6 7 )
found that increased participation by employees
having a high need for independence was as-
sociated with improved performance, but no
such relationship could be obtained in the case
of employees w h o had a low need for indepen-
dence (see also Vroom, 1959).
With regard to attitude and motivation, r e -
searchers have c o m m o n l y treated these con-
structs as o u t c o m e variables in evaluating the
effectiveness of budgetary participation. A rea-
son underlying this c o m m o n assumption is the
expectation that participation should positively
affect these variables as o u t c o m e criteria. How-
ever, the results to date are generally inconsis-
tent. Although Collins ( 1 9 7 8 ) and Vroom
(~959), for example, reported a significant, posi-
tive relationship b e t w e e n participation a n d
employee attitude, Ivancevich ( 1 9 7 9 ) found no
such relationship. In the case of motivation, a
similarly equivocal situation apparently exists.
While Lawler & Hackman (1979), Siegal & Ruh
(1973), Patchen ( 1 9 7 0 ) and Hofstede ( 1 9 6 7 )
reported a significant and positive relationship
between participation and motivation, Brownell
(1983), Ivancevich ( 1 9 7 9 ) and Staw ( 1 9 7 7 ) did
not observe such a relationship.
One potential explanation for these inconclu-
sive results is that changing (improving)
employee attitude and motivation through
budgetary participation, or by other means,
assumes that individuals are only the recipients
of stimuli, and fails to consider that individuals
may be m o r e than merely passive recipients of
such stimuli. A m o r e realistic view is that since
individuals themselves may be the augmentors
of stimuli (see Milton et al., 1984), an organiza-
tion may be better off following a budgeting
style (participative or non-participative) that is
congruent with its e m p l o y e e attitude and moti-
vation.
Two exceptions to the treatment of employee
attitude and motivation as o u t c o m e variables are
Brownell & Mclnnes ( 1 9 8 6 ) and Milani (1975).
Brownell & McInnes examined the potential of
employee motivation as a construct intervening
in the relationship b e t w e e n budget participation
and performance. The term intervening is used
here in the sense that the relationship b e t w e e n
budget participation and performance exists
partly via motivation as shown in Fig. 1 (see
Attitude
motivation
participation m performance
Fig. 1. Model sharing motivation and attitude as intervening variables.
(Adapted from Brownell & McInnes, 1986.)
Brownell & Mclnnes, 1986). Contrary to their
expectations, motivation did not play a signifi-
cant intervening role, i.e. the relationship be-
t w e e n participation and performance did not
exist via motivation. In another study, Milani
( 1 9 7 5 ) examined the potential of employee
attitude as a construct intervening the relation-
ship b e t w e e n budget participation and perform-
 MANAGERIALATYITUDE,MOTIVATIONAND BUDGETPERFORMANCE
a n c e ( s e e Fig. 1). Milani f o u n d that a t t i t u d e , like
m o t i v a t i o n , d i d n o t p l a y an i n t e r v e n i n g r o l e in
explaining the relationship.
Unlike t h e s e e a r l i e r s t u d i e s t h e p r e s e n t s t u d y
examined the potential of managerial attitude
a n d m o t i v a t i o n as c o n s t r u c t s moderating the re-
lationship between budget participation and
p e r f o r m a n c e . H e r e t h e t e r m m o d e r a t i n g is u s e d
in t h e s e n s e that a t t i t u d e a n d m o t i v a t i o n a r e re-
l a t e d n e i t h e r to b u d g e t p a r t i c i p a t i o n n o r per-
f o r m a n c e b u t to t h e r e l a t i o n s h i p b e t w e e n t h e s e
l a t t e r v a r i a b l e s as s h o w n in Fig. 2 ( s e e Gul,
1984).
Attitude
motivation
Budget Managerial
participation performance
Fig. 2. Model showing attitude and motivation as moderating variables.
( Adapted from Gul, 1974. )
F o l l o w i n g F e s t i n g e r ' s ( 1 9 5 7 ) t h e o r y o f cogni-
tive d i s s o n a n c e , it m a y b e a r g u e d that e m p l o y e e s
who have a more favourable (high) attitude or
motivation develop a cognitive dissonance or
p s y c h o l o g i c a l u n e a s i n e s s if t h e i r p e r f o r m a n c e is
l o w ( b e l o w e x p e c t e d level). To r e d u c e this dis-
s o n a n c e , t h e y a t t e m p t to i m p r o v e t h e i r p e r f o r m -
a n c e ( H a m n e r & Organ, 1978; C a l d e r & Ross,
1976). B u d g e t p a r t i c i p a t i o n as a m e c h a n i s m for
i n f o r m a t i o n e x c h a n g e e n a b l e s e m p l o y e e s to ob-
tain a c l e a r e r u n d e r s t a n d i n g o f t h e i r jobs,
t h e r e b y h e l p i n g t h e m to i m p r o v e t h e i r p e r f o r m -
a n c e ( H o p w o o d , 1976). I n c o n t r a s t , e m p l o y e e s
w h o h a v e a less f a v o u r a b l e ( l o w ) a t t i t u d e o r
motivation may not develop such a cognitive
d i s s o n a n c e d u e to t h e i r l o w p e r f o r m a n c e s . Con-
s e q u e n t l y , t h e s e e m p l o y e e s are less likely to vol-
u n t a r i l y a t t e m p t to i m p r o v e t h e i r p e r f o r m a n c e
t h r o u g h b u d g e t p a r t i c i p a t i o n o r b y o t h e r means.
Alternatively, an a u t h o r i t a r i a n d e v i c e ( a non-
p a r t i c i p a t i v e b u d g e t , for e x a m p l e ) m a y b e m o r e
There is no theoretical justification for expecting a two way interaction between attitude and motivation or a three way
interaction among budget participation, attitude and motivation that affect performance. To validate this view, statisticaltests
were undertaken and the results are reported later in this paper.
467
effective in i m p r o v i n g p e r f o r m a n c e in this case.
Based o n t h e a b o v e discussion, it c a n b e
a r g u e d that b u d g e t p a r t i c i p a t i o n m a y b e effec-
tive in t h e c a s e o f e m p l o y e e s w h o h a v e a m o r e
f a v o u r a b l e a t t i t u d e o r m o t i v a t i o n b u t m a y b e in-
effective in t h e c a s e o f e m p l o y e e s w h o h a v e a
less f a v o u r a b l e a t t i t u d e o r m o t i v a t i o n .
Hypotheses
T o s u m m a r i z e , it is a r g u e d that o u r u n d e r -
s t a n d i n g o f t h e r e l a t i o n s h i p b e t w e e n b u d g e t par-
ticipation and performance can be improved by
c o n s i d e r i n g t h e m o d e r a t i n g r o l e that a t t i t u d e
a n d m o t i v a t i o n h a v e o n t h e relationship. T o
establish t h e m o d e r a t i n g r o l e o f a t t i t u d e a n d
m o t i v a t i o n , it has b e e n a r g u e d that b u d g e t par-
ticipation by employees who have a more
favourable (high) attitude or motivation may
h a v e a significant, p o s i t i v e r e l a t i o n s h i p w i t h p e r -
f o r m a n c e . In contrast, b u d g e t p a r t i c i p a t i o n b y
e m p l o y e e s w h o h a v e a less f a v o u r a b l e ( l o w ) at-
t i t u d e o r m o t i v a t i o n m a y n o t h a v e s u c h a rela-
tionship with performance. These arguments
m a y b e s u m m a r i z e d in t h e f o l l o w i n g h y p o t h e s e s :
Hs:There is an interaction between budget participation
and attitude affecting managerial performance. Managers
whose budget participation is congruent with their at-
titude will demonstrate improved performance, while
managers whose budget participation is incongruent
with their attitude will demonstrate hampered perform-
ance. 1
H~"There is an interaction between budget participation
and motivation affecting managerial performance. Mana-
gers whose budget participation is congruent with their
motivation will demonstrate improved performance,
while managers whose budget participation is incon-
gruent with their motivation will demonstrate hampered
performance.
METHOD
The research method involved administering
a q u e s t i o n n a i r e to a s a m p l e o f l o w e r a n d m i d d l e
468
level managers in a large company. The com-
pany was originally incorporated in Australia as a
mining and associated investments company
about a decade ago. In recent years it has
emerged as a major Australian company, mainly
through the acquisition of other companies
doing business in diversified fields. The com-
pany is listed on the Australian Stock Exchange,
operates nationally in Australia and consists of
five operating divisions engaged in the import-
ing and distribution of automobiles, and the
manufacturing and selling of furniture, plastic
building products, gardening equipment and
electrical goods.
A series of meetings with the corporate man-
agement indicated that each of the divisions was
treated as a profit centre, with the divisional
managers being given considerable autonomy in
running their divisions. All of the divisions have
been using budgets for several years to plan their
operations and to evaluate performance. More-
over, the corporate management appeared to
have been interested in encouraging a participa-
tive style of budgeting in all divisions.
The distribution of the questionnaire was
handled via the internal mailing system of the
company, under a corporate cover letter
encouraging cooperation in the study. Each
respondent was provided with a stamped, self-
addressed envelope to return the completed
questionnaire direct to the researcher. The sam-
ple consisted of 115 middle and lower level
managers from various functional areas: sales,
marketing, production, R&D, purchase, mainte-
nance, personnel, administration and accounts
and finance. However, selection of the respon-
dents was made by the division management, so
the sample was not strictly random. In selecting
respondents, the management was requested to
choose samples of managers from all functional
areas.
The questionnaire was fully completed by 83
managers, yielding a response rate of 72%.
These managers were from sales ( 18% ), market-
2 Afactor analysis using the scores for the measure in this study yielded one eigen value greater than unity resulting in the
extraction ofone Factor.The Factorhad an eigen value of 3.82 and explained 64% of variance in participation. The factorload-
ings of items 1--6in the instrument were 0.83, 0.57, 0.70, 0.89. 0.92 and 0.85, respectively.
LOKMANMIA
ing (6%), production (19%), R&D (5%), pur-
chasing (7%), maintenance (10%), personnel
(6%), administration ( 1 2 % ) and accounts and
finance ( 17% ). The respondents had an average
tenure of 7 years (ranging from 1 to 20 years)
with the corporation and supervised on average
12 subordinates (ranging from 1 to 40).
The measurement of variables
The variables incorporated into the question-
naire were participation, attitude, motivation
and performance.
Budget participatior~ Milani's ( 1 9 7 5 ) mea-
sure of budget participation was employed to
assess the amount of influence and involvement
an individual employee perceives to have on a
jointly-set budget (Brownell, 1979). The use of
this instrument enables the results of the present
study to be compared with those of other studies
of budget participation. Respondents are re-
quested to rate their level of budget participa-
tion under each of the six items on a 7-point
Likert-type scale. The overall score for the con-
struct is the sum of the scores under each of the
six items. The use of the measure in the present
study yielded a Cronbach alpha coefficient of in-
ternal reliability of 0.89 which compares favour-
ably with other studies of this type 2 (see Brow-
nell, 1985).
Attitude. A literature review indicated that, in
a budgetary situation, Milani ( 1 9 7 5 ) offers the
most clear and complete definition of attitude.
He defined attitude in terms of employees' feel-
ings and predispositions towards their jobs
(attitude towards job) and employer (attitude
towards company) in a budgetary context. At-
titude towards the job is measured using a 16-
item instrument adapted by Milani ( 1 9 7 5 ) from
a larger instrument developed by Miller (1934).
Examples of items included in this measure are:
"I can think of few jobs I would rather have than
this one" and "This job is disliked by everyone".
 MANAGERIALATTITUDE,MOTIVATIONAND BUDGETPERFORMANCE 469

Attitude towards the c o m p a n y is m e a s u r e d using
a 10-item instrument also a d a p t e d by Milani
( 1 9 7 5 ) from an instrument d e v e l o p e d by
Bergen (1939). Examples of items i n c l u d e d in
this measure are: "A large n u m b e r of the
e m p l o y e e s w o u l d leave h e r e if they c o u l d get
g o o d jobs elsewhere", and "On the whole, the
c o m p a n y treats us about as well as w e deserve".
The score for a manager's overall attitude is the
sum of scores for his attitude towards the job and
attitude towards the c o m p a n y (Shaw & Wright,
1967, pp. 130-132; Tiflfin, 1952, pp. 4 6 5 - 4 7 1 ) .
A c h e c k of internal reliability for the measure in
this study y i e l d e d a Cronbach alpha coefficient
of 0.61 w h i c h is an a c c e p t a b l y high level (Nun-
nally, 1967).
MotivatiorL W o r k motivation was m e a s u r e d
using an instrument d e v e l o p e d by Lawler & Sut-
d e (1973). In the c u r r e n t study, w o r k motiva-
tion was v i e w e d in the c o n t e x t of an e x p e c t a n c y
paradigm, and thus as a function of the e f f o r t -
p e r f o r m a n c e (E--*P) expectancy, the perform-
a n c e - o u t c o m e (P--*O) e x p e c t a n c y and valence
(V) (Ferris, 1977; Vroom, 1964). An e x a m p l e of
items measuring (E--*P)e x p e c t a n c y is "Working
hard ---->G o o d job performance", and (P-*O) ex-
p e c t a n c y is "Working hard --->High pay". The va-
lence (V) is m e a s u r e d by the e x t e n t of desir-
ability for, say, "High pay". Using the instrument,
r e s p o n d e n t s r e p o r t their e x p e c t a n c i e s on a 7-
point scale ranging from 1 ( n e v e r ) to 7 ( a l w a y s )
and valences on a 9-point scale ranging from 1
( e x t r e m e l y u n d e s i r a b l e ) to 9 ( e x t r e m e l y desir-
able). The overall score for motivation is deter-
m i n e d by c o m b i n i n g the e x p e c t a n c i e s and val-
ence. 3 Use of the e x p e c t a n c y measure in this
study y i e l d e d an internal reliability coefficient of
0.74 for (E--*P) e x p e c t a n c y and 0.86 for (P--~O)
expectancy. The internal reliability coefficient
o b t a i n e d for the valence measure was 0.76.
These coefficients c o m p a r e favourably with pre-
vious results (Ferris, 1977).
Performance. Managerial p e r f o r m a n c e was
m e a s u r e d using superior ratings. Self-ratings
w e r e not used to avoid the possibility of having
a higher leniency e r r o r ( h i g h e r mean values)
and a l o w e r variability e r r o r ( r e s t r i c t i o n of
r a n g e ) in the score (see Thornton, ~968; Prien &
Liske, 1962). Moreover, since the participants in
this study held managerial positions, an evalua-
tion of their p e r f o r m a n c e on a m o r e global basis
was c o n s i d e r e d important. The superior ratings
aimed to p r o v i d e such a w i d e r evaluation of
managerial p e r f o r m a n c e (Heneman, 1974).
A list containing the names and addresses of
superiors for the 83 participating managers in
the sample was obtained from the divisional
managers' office. Also information on the p e r i o d
for w h i c h each of the participating managers had
b e e n working u n d e r his c u r r e n t s u p e r i o r p r i o r
to the study was also obtained. A p e r i o d of 6
m o n t h s was c o n s i d e r e d necessary for a superior
to form an accurate o p i n i o n about his subordi-
nate's performance. This criterion was met by 60
of the 83 participating managers. The superior of
each of these 60 managers was then r e q u e s t e d to
evaluate as accurately as possible the overall per-
formance of the participating manager directly
r e p o r t i n g to him. 4 The superiors w e r e p r o v i d e d
with a 9-point Likert-type scale ranging from
b e l o w average ( 1 ) to above average perform-
ance (9). Each of the r e s p o n d e n t superiors was
assured of anonymity and p r o m i s e d that the data
c o l l e c t e d w o u l d be used only for the p u r p o s e of
the study. Superior ratings of p e r f o r m a n c e for 51
participating managers w e r e obtained. Thus, the
final sample size used for analysis was 51.

.sMotivation(M) = (E--~P) [(P ~ O) (V)l where:

(E ~ P) is the effort-performance expectancy; (P --* O) is the performance-outcome expectancy; and (V) is the valence or
desirabilityof a reward.
In addition to the assurance of anonymityand the promise for using the data only for the purpose of the study, the superiors
were specificallyrequested to evaluate performance of a participating manager only if they (superiors) could do it without
any personal prejudice. Four superiors expressed their unwillingnessto evaluate seven of the participating managers' per-
formance on personal grounds.
470 LOKMAN MIA

RESULTS Y = a + b l X 1 + b2X2 + b 4 X l X 2 + e (1)

where:
Table 1 presents descriptive statistics and Y = managerialperformance;
Table 2 presents the correlation matrix for the X 1 = budget participation (rescaled,
variables in t h e study. T h e a b s e n c e o f significant m e a n = 0); s
multi-collinearity amongst the variables (see Nie x2 = attitude (rescaled, mean = 0);
e t a L , 1 9 7 5 , p. 3 4 0 ) i n d i c a t e s t h a t r e g r e s s i o n x~2 = interaction term.
analysis m a y be appropriately used to test
A s i g n i f i c a n t c o e f f i c i e n t b4 i n e q u a t i o n (1)
h y p o t h e s e s H 1 and H 2 ( S c h o o n h o v e n , 1981;
would indicate an interaction between budget
Blalock, 1 9 7 2 ) . It m a y b e n o t e d t h a t t h e m u l t i -
participation and attitude affecting perform-
p l i e r i n t e r a c t i o n m o d e l p r e s e n t e d in e q u a t i o n
ance, thus leading to an acceptance of hypo-
( 1 ) is e f f i c i e n t i n t e s t i n g a n i n t e r a c t i o n e f f e c t
t h e s i s H 1.
( G o v i n d a r a j a n , 1 9 8 6 ; S c h o o n h o v e n , 1 9 8 1 ; Alli-
T h e results p r e s e n t e d in Table 3 reveal just
son, 1977).
such a significant interaction between participa-
Hypothesis H1 tion and attitudes affecting performance, there-
H~ w a s t e s t e d u s i n g t h e r e g r e s s i o n e q u a t i o n : f o r e p e r m i t t i n g a c c e p t a n c e o f Hi.
TABLE 1. Descriptive statistics
Variables Mean S.D. Theoretical range Actual range

Performance 6.73 1.16 1-9 4--9

Participation 30.57 7.80 6-42 10--40
Attitude 6.84 1.18 0-11 3-9
Motivation 3.80 1.59 1-N/A 1-10

TABLE 2. Matrix of intercorrelations

Performance Y ParticipationXt AttitudeX2 MotivationX3 X4(XtX2) Xs(XIX~)

Y 1.00
XI -O. 11 1.00
X2 -O. 15 0.29" 1.00
X3 -0.10 0.02 0.18* 1.00
X4 0.35* -0.18" -0.19" -0.10 1.00
X5 0.28* -0.04 -0.10 -0.12 0.14 1.00
* P < 0.05.
TABLE 3. Test of Hl: interaction between participation and attitude affecting performance
Variables CoefficientsB Coefficientvalue S.E. T* Statistical value SignilicanceP

XI Participation bI -0.04 0.21 0.19 NS

X2 Attitude b2 -0.08 0.14 0.56 NS
X~X2 Interaction b4 0.47 0.20 2.35 < 0.02
Constant a 6.60 0.17 38.89 < 0.01
R2 = 1 3 % ; F(3,47) = 2.33;P < 0.08; n = 51.
* One tailed test.

5Application of the deviation score method is useful to test the proposition in this study that managerial performance should
improve in cases of managers whose budget participation is congruent (a good fit) with their attitude or motivation. A low
participation (negative rescaled value), for example, by managers who have a less favourable attitude (again a negative re-
scaled value) is a congruent situation and the interaction term is positive. A similar result is expected in cases of high partici-
16ation and more favourable attitude or motivation. However, in cases where participation is high but attitude or motivation
is less favourable or vice versa, an incongruent (a misfit) situation exists resulting in a negative interaction term which is ex-
pected to be associated with hampered performance.
 MANAGERIAL ATTITUDE, MOTIVATION AND BUDGET PERFORMANCE 471

Hypothesis H 2 data from the study. Results presented in Appen-

H2 was tested by fitting an equation identical
to equation ( 1 ), substituting the motivation ( X 3)
data for those on attitude.
The results presented in Table 4 reveal a sig-
nificant interaction b e t w e e n budget participa-
tion and motivation permitting acceptance of
n~
dices ( 1 ) and ( 2 ) reveal the absence of such
interactions.
A further analysis o f the interaction effects
In order to facilitate understanding of the
interaction effects, each of the interaction terms
was elaborated mathematically, as shown in equ-

TABLE 4. Test of H2: interaction b e t w e e n participation and attitude affecting p e r f o r m a n c e

Variables CoefficientsB Coefficient value S.E. T* Statistical value SignificanceP

X t Participation bt --0.14 0.20 0.71 NS

X~ Motivation b3 -0.05 O. 10 0.47 NS
xtx ~ Interaction b5 0.30 O. 15 2.00 < 0.05
Constant a 6.72 O. 16 42.93 < 0.01

R 2 = 9.4% ; F(3,47) = 1.70; NS = not significant; n = 51.

Earlier it was argued that a significant two way
interaction b e t w e e n attitude and motivation
(the two contingent variables), and a three way
interaction a m o n g participation, attitude and
motivation affecting performance should not be
expected, due to an absence of theoretical sup-
port. This argument was statistically tested using
ations ( 2 ) and ( 3 ) below, and then graphically
presented in Figs 3 and 4. The steps taken for this
analysis are: ( a ) taking the partial derivative of
equation ( 1 ) over XI, ( b ) determining the value
o f X 2 ( t h e inflection point) at which this variable
would have no moderating effect on the rela-
tionship b e t w e e n X 1 and Y, and ( c ) plotting the

/
>" ~
'~1'~ ! O/ /~
0.1 0.2 013 014 015 016
Employee attitude
017

Fig. 3. Interaction between budget participation and employee attitude affecting managerial performance.

+0.2

.~ +0.I

I I I I
o • . . u.o 0.7
0.5

Workmotivation

-0.2

Fig. 4. Interaction between budget participation and work motivation affecting managerial performance.
472 LOKMANMIA
joint effect of the main and interaction terms
( see Schoonhoven, 1981; Southwood, 1978).
The use of steps ( a ) and ( b ) above p r o d u c e d
equations ( 2 ) and ( 3 ) as:
d/dX 1 = b2 +b4X 2 (2)
and
x 2 = - b /b4 (3)
Substituting the values for b I and b 4 from Table
3 into equation ( 3 ) producedX2 = 0.08 (the in-
flection point). Again, substituting the values for
b I a n d b4 from Table 3 and values for X 2 into
equation (2), the joint effect of the main and in-
teraction terms was determined.
The results presented in Fig. 3 reveal that the
nature of the relationship b e t w e e n participation
and performance changes due to the moderating
effect of attitude on such a relationship. For high
attitude scores, i.e. attitude values greater than
6.92 (6.84, the mean + 0.08), budget participa-
tion was associated with improved managerial
performance, whereas for attitude values less
than 6.92 ( l o w attitude), budget participation
was associated with h a m p e r e d managerial per-
formance. For attitude values approximately
equal to 6.92 the association b e t w e e n budget
participation and managerial performance was
found to be neutral.
Using steps (a), ( b ) and ( c ) above, it was
found that budget participation was associated
with improved managerial performance for high
motivation, i.e. motivation values greater than
4.26 (3.80, the mean + 0.46, the inflection
point) whereas budget participation was
associated with h a m p e r e d managerial perform-
ance for motivation values less than 4.26 ( l o w
motivation). For motivation values approxi-
mately equal to 4.26, the association between
budget participation and performance was neut-
ral. Figure 4 presents the results. Note that the
values which are 6.92 for attitude and 4.26 for
motivation are ( a ) within the range of values ob-
served in this study, and ( b ) close to the respec-
tive mean values for attitude and motivation (see
Table 1). These values therefore represent the
average attitude and motivation respectively in
this study.
The slope of the line plotting the joint effect of
the main and interaction terms in Fig. 3 is higher
than the slope of that line in Fig. 4. This differ-
ence in slope indicates that the moderating
effect of attitude on the participation-perform-
ance relationship is stronger than that of motiva-
tion.
DISCUSSION
As expected, a significant interaction b e t w e e n
budget participation and attitude affecting
managerial performance was obtained. The
results revealed that budget participation by
managers w h o had a m o r e favourable (high) at-
titude was associated with improved perform-
ance while that by managers w h o had a less
favourable ( l o w ) attitude was associated with
h a m p e r e d performance. Thus, managers' at-
titudes toward their jobs and employer appear
to be a contingent variable moderating the rela-
tionship b e t w e e n their budget participation and
performance. These results offer an explanation
why Milani ( 1 9 7 5 ) did not obtain the results he
e x p e c t e d since he tested the intervening role of
attitude in an effort to explain the relationship
b e t w e e n participation and performance.
Motivation was also found to significantly
moderate the relationship b e t w e e n budget par-
ticipation and performance. The results revealed
that budget participation by managers w h o had a
m o r e favourable (high) motivation was
associated with improved performance, while
that by managers w h o had a less favourable
( l o w ) motivation was associated with h a m p e r e d
performance. Thus, managers' motivation also
appears to be a contingent variable. Once again,
this finding offers an explanation for the results
reported by Brownell & McInnes ( 1 9 8 6 ) w h o
tested the intervening role of motivation in an
attempt to explain the relationship b e t w e e n
budget participation and performance, and
found that motivation was not a significant inter-
vening variable.
The existence of a significant moderating role
 MANAGERIALATTITUDE, MOTIVATIONAND BUDGETPERFORMANCE 473

o f a t t i t u d e a n d m o t i v a t i o n as d i s c u s s e d a b o v e
supports the fundamental argument made
e a r l i e r in this p a p e r that an o r g a n i z a t i o n m a y b e
b e t t e r off f o l l o w i n g a b u d g e t i n g style ( p a r t i c i p a -
tive o r n o n - p a r t i c i p a t i v e ) that is c o n g r u e n t w i t h
its e m p l o y e e a t t i t u d e a n d m o t i v a t i o n . T h e re-
sults i m p l y that an i m p o s e d o r a n o n - p a r t i c i p a -
tive b u d g e t i n g m a y b e m o r e effective ( i n t e r m s
o f p e r f o r m a n c e ) in t h e case o f m a n a g e r s w h o
h a v e a less f a v o u r a b l e ( l o w ) a t t i t u d e a n d / o r
m o t i v a t i o n ( s e e Figs 3 a n d 4). O n t h e o t h e r hand,
a p a r t i c i p a t i v e b u d g e t i n g m a y b e m o r e effective
in t h e c a s e o f m a n a g e r s w h o h a v e a m o r e favour-
a b l e ( h i g h ) a t t i t u d e a n d / o r m o t i v a t i o n . How-
ever, it s h o u l d b e n o t e d t h a t s i n c e this s t u d y
u s e d Milani's ( 1 9 7 5 ) p a r t i c i p a t i o n c o n t i n u u m
scale, t h e p o s s i b l e effect o f a n o n - p a r t i c i p a t i v e o r
authoritarian budgeting on performance could
n o t b e e x p l i c i t l y tested. F u t u r e r e s e a r c h n e e d s
to p u r s u e this issue further.
B e y o n d t h e usual l i m i t a t i o n s o f s u r v e y re-
s e a r c h ( B r o w n e l l , 1985), a n u m b e r o f issues
w o r t h d i s c u s s i n g are:
( 1 ) Data for t h e s t u d y w e r e c o l l e c t e d f r o m
v a r i o u s d e p a r t m e n t s in a large c o m p a n y . Al-
t h o u g h t h e d e p a r t m e n t s a p p e a r e d t o h a v e a rea-
sonable amount of autonomy, the top manage-
m e n t w a s likely to h a v e h a d a significant influ-
ence on how the departments were managed.
T h e r e m a y t h e r e f o r e b e factors at w o r k w h i c h
a r e specific to t h e p a r t i c i p a n t c o m p a n y , s o s o m e
c a u t i o n is n e c e s s a r y b e f o r e g e n e r a l i z i n g t h e re-
suits.
( 2 ) T h u r s t o n e & Chave's ( 1 9 2 9 ) t h e o r y a n d
t e c h n i q u e , o n w h i c h t h e a t t i t u d e scale is based,
has b e e n c r i t i c i s e d b e c a u s e t h e s a m e s c o r e for
two individuals may not necessarily mean they
h a v e an i d e n t i c a l a t t i t u d e ( s e e Milani, 1975;
Shaw & W r i g h t , 1967; Tiffin, 1957). M o r e o v e r ,
a l t h o u g h t h e i n t e r n a l reliability coefficient
( 0 . 6 1 ) for t h e scale m e a s u r i n g e m p l o y e e at-
t i t u d e is satisfactory ( N u n n a l l y , 1967; Ferris,
1977), it is n o t v e r y high. U n f o r t u n a t e l y p r e v i -
o u s r e s e a r c h e r s w h o h a v e u s e d t h e scale h a v e
n o t r e p o r t e d t h e i r reliability c o e f f i c i e n t (see, for
e x a m p l e , Milani, 1975).
( 3 ) An e m p l o y e e ' s p e r f o r m a n c e m a y b e influ-
e n c e d b y variables s u c h as g r o u p b e h a v i o r , j o b
security, w o r k i n g c o n d i t i o n s , r e w a r d s y s t e m s
and top managements' policies not investigated
in this study. T h e s e t h e r e f o r e m a y b e o t h e r con-
t i n g e n t variables m o d e r a t i n g t h e p a r t i c i p a t i o n -
p e r f o r m a n c e relationship.
N o t w i t h s t a n d i n g s u c h limitations, t h e r e s u l t s
h e l p to r e c o n c i l e t h e r e s u l t s r e p o r t e d b y previ-
o u s r e s e a r c h in this a r e a a n d t h e r e b y m a k e s o m e
c o n t r i b u t i o n to i m p r o v e o u r u n d e r s t a n d i n g o f
t h e effect o f p a r t i c i p a t i o n o n m a n a g e r i a l p e r -
f o r m a n c e in a b u d g e t a r y c o n t e x t . C e r t a i n l y o n
t h e basis o f t h e p r e s e n t findings it w o u l d a p p e a r
that an o r g a n i s a t i o n is likely to b e b e t t e r off fol-
l o w i n g a b u d g e t i n g style that is c o n g r u e n t w i t h
its e m p l o y e e a t t i t u d e a n d m o t i v a t i o n .

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APPENDIX 1. Interaction between attitude and motivation affecting performance

Variables Coefficients B Coefficient value S.E. T* Statistical value Significance P

X2 Attitude bt -O. 14 O. 14 0.96 NS

X~ Motivation b2 -0.06 0.11 0.58 NS
X2X~ Interaction b6 0.03 0.09 0.28 NS
Constant a 6.72 O.16 40.78 < 0.01

R2 = 3% ; F{3,47~= 0.50; NS = not significant; n = 51.

* One tailed test.

APPENDIX 2. Interaction among participation, attitude and motivation affecting performance

Variables Coefficients B Coefficient value S.E. T* Statistical value Significance P

XI Participation bt -0.09 0.22 0.40 NS

X2 Attitude b2 -0.06 0.14 0.44 NS
X3 Motivation b3 --0.06 0.12 0.52 NS
mix 2 Interaction b4 0.38 0.20 1.88 < 0.06
X~X3 Interaction b5 0.25 0.16 1.56 NS
X2X~ Interaction be -0.01 0.10 0.12 NS
XtX2X.3 Interaction b7 O. 17 0.15 1.18 NS
Constant a 6.64 1.68 39.64 < 0.01

Rz = 22% ; F~7,4.~~ = 1.68; NS = not significant; n = 51.

*One tailed test.