The role of budgetary information in performance evaluation

  • Michael Briers
  • Mark Hirst

Abstract

This paper provides a review of studies that focus on the use of budgetary information in performance evaluation. Our survey shows that studies have recognized that this information is used in a variety of ways. In addition, various psychological and behavioural effects of alternative uses as well as factors that give rise to a particular use have been identified. Notwithstanding this breadth of analysis, a critical review of the literature shows that in recent years theoretical development has been piecemeal, and there are instances of selective referencing and an uncritical acceptance of theory statements in related literature. More generally, theoretical development has taken a secondary role to an emphasis on statistical analysis. Further, recent empirical studies tend to be method-driven in their selection of relevant phenomena and, in addition, include several characteristics that cause an uncoupling of the connection between theory statements and empirical tests. The present review interprets these limitations as providing opportunities for future research.

Keywords

Contingency Theory Environmental Uncertainty Antecedent Variable Dysfunctional Behaviour Case Evidence 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Bibliography

  1. Argyris, C., The Impact of Budgets on People (Ithaca: School of Business and Public Administration, Cornell University, 1952).Google Scholar
  2. Arnold, J.A., Moderator Variables: A Clarification of Conceptual, Analytic, and Psychometric Issues, Organisational Behaviour and Human Performance (1982) pp. 143-174.Google Scholar
  3. Birnberg, J.B., Turopolec, L. & Young, S.M., The Organizational Context of Accounting, Accounting, Organizations and Society (1983) pp. 111-129.Google Scholar
  4. Bottger, P.C. & Hirst, M.K., The Interaction Effect of Budget Emphasis and Budget Participation on Experienced Job Stress, Human Resource Management (1988) in press.Google Scholar
  5. Boyd, G.A., Management Accounting and Contingency Theory: The Problem of Borrowing the Construct of the Environment, Honours Thesis, Commerce Faculty, University of New South Wales (1984).Google Scholar
  6. Brownell, P., The Role of Accounting Data in Performance Evaluation, Budgetary Participation, and Organisational Effectiveness, Journal of Accounting Research (Spring 1982) pp. 12-27.Google Scholar
  7. Brownell, P., Budgetary Systems and the Control of Functionally Differentiated Organisational Activities, Journal of Accounting Research (Autumn 1985) pp. 502-512.Google Scholar
  8. Brownell, P., The Role of Accounting Information, Environment and Management Control in Multi-national Organisations, Accounting and Finance (1987a) pp. 1-16.Google Scholar
  9. Brownell, P., The Use of Accounting Information in Management Control, in Ferris, K.R. and Livingstone, J.L. (eds) Management Planning and Control: The Behavioral Foundations (Columbus, OH: Century Publishing Co., 1987b).Google Scholar
  10. Brownell, P., A Discussion of Briers and Hirst’s’ supervisory Style: A Review of the role of Budgetary Information in Performance Evaluation’, Unpublished paper, School of Economics and Financial Studies, Macquarie University (1988).Google Scholar
  11. Brownell, P. & Hirst, M.K., Reliance on Accounting Information, Budgetary Participation, and Task Uncertainty: Tests of a Three Way Interaction, Journal of Accounting Research (Autumn 1986) pp. 241-249Google Scholar
  12. Brownell, P. & Merchant, K.A., Technology, Budget System Design, and Performance, Working Paper, Macquarie University (1987).Google Scholar
  13. Burrell, G. and Morgan, G., Sociological Paradigms and Organizational Analysis (London: Heinemann, 1979).Google Scholar
  14. Campbell, D.T. & Stanley, J.C., Experimental and Quasi-experimental Designs for Research (Chicago: Rand McNally College Publishing Co., 1966).Google Scholar
  15. Chua, W.F. & Lowe, T., Performance Criteria in their Social Contexts: the Shifting Fortunes of Selection and Turnover in a School of Nursing, Working Paper, University of New South Wales (1984).Google Scholar
  16. Collins, F., Munter, P. & Finn, D.W., The Budgeting Games People Play, The Accounting Review (January 1987) pp. 29-49.Google Scholar
  17. De Coster, D.T. & Fertakis, J.P., Budget-induced Pressure and Its Relationship to Supervisory Behavior, Journal of Accounting Research (Autumn 1968) pp. 237-246.Google Scholar
  18. Dent, J.F., Strategy, Organization and Control: Some Possibilities for Accounting Research, Paper Presented at American Accounting Association Conference, New York (1986).Google Scholar
  19. Dunk, A.S., The Interaction of Budget Emphasis and Budgetary Participation: Implications for Managerial Performance, Working Paper, Macquarie University (undated).Google Scholar
  20. Govindarajan, V., Appropriateness of Accounting Data in Performance Evaluation: An Empirical Examination of Environmental Uncertainty as an Intervening Variable, Accounting, Organizations and Society (1984) pp. 125-135.Google Scholar
  21. Govindarajan, V., Budget Evaluation Style and Organizational Effectiveness: Strategy as an Intervening Variable, Working Paper (undated).Google Scholar
  22. Govindarajan, V. & Gupta, A.K., Linking Budgetary Control Systems to Business Unit Strategy: Impact on Performance, Accounting, Organizations and Society (1985) pp. 51-66.Google Scholar
  23. Hirst, M.K., Accounting Information and the Evaluation of Subordinate Performance: A Situational Approach, The Accounting Review (October 1981) pp. 771-784.Google Scholar
  24. Hirst, M.K., Reliance on Accounting Performance Measures, Task Uncertainty, and Dysfunctional Behaviour: Some Extensions, Journal of Accounting Research (Autumn 1983) pp. 596-605.Google Scholar
  25. Hirst, M.K., Some Further Evidence on the Effects of Budget Use and Budget Participation on Managerial Performance, Australian Journal of Management (1987) pp. 49-56.Google Scholar
  26. Hirst, M.K. & Lowy, S.M., The Linear Additive and Interactive Effects of Budgetary Goal Difficulty and Feedback on Performance, Working Paper, Commerce Faculty, University of New South Wales (1987).Google Scholar
  27. Hirst, M.K. & Yetton, P., Influence of Reliance on Accounting Performance Measures and Job Structure on Role Ambiguity for Production and Non-production Jobs, Australian Journal of Management (1984) pp. 53-62.Google Scholar
  28. Hofstede, G.H., The Game of Budget Control (London: Tavistock, 1968).Google Scholar
  29. Hopwood, A.G., An Empirical Study of the Role of Accounting Data in Performance Evaluation, Empirical Research in Accounting, Supplement to Journal of Accounting Research (1972) pp. 156-182.Google Scholar
  30. Hopwood, A.G., An Accounting System and Managerial Behaviour (London: Saxon House, 1973).Google Scholar
  31. Hopwood, A.G., Criteria of Corporate Effectiveness, in Brodie, M. and Bennett, R. (eds) Perspectives on Managerial Effectiveness pp. 81-96 (Thames Valley Regional Management Centre, 1979).Google Scholar
  32. Hopwood, A.G., On Trying to Study Accounting in the Contexts in Which it Operates, Accounting, Organizations and Society (1983) pp. 287-305.Google Scholar
  33. Imoisili, O.A., Task Complexity, Budget Style of Evaluating Performance and Managerial Stress: An Empirical Investigation, Unpublished Dissertation, Graduate School of Business, University of Pittsburgh (1985).Google Scholar
  34. Jaworski, B.J., Towards a Theory of Marketing Control: Environmental Context, Control Types and Consequences, Journal of Marketing (July 1988) pp. 23-39.Google Scholar
  35. Kahn, R.L., Wolfe, D.M., Quinn, R.P. & Rosenthal, R.A., Organizational Stress: Studies in Role Conflict and Ambiguity (New York: Wiley, 1964).Google Scholar
  36. Kenis, I., Effects of Budgetary Goal Characteristics on Managerial Attitudes and Performance, The Accounting Review (October 1979) pp. 707-721.Google Scholar
  37. Kidder, H.K., Sellitz Wrightsman & Cook’s Research Methods in Social Relations (New York: Holt, Rinehart & Winston, 1981).Google Scholar
  38. Lawrence, P. & Lorsch, J., Organization and Environment (Homewood: Irwin, 1967).Google Scholar
  39. Locke, E.A., The Myths of Behavior Modification in Organizations, Academy of Management Review (1977) pp. 543-542.Google Scholar
  40. Lowe, E.A. & Shaw, R.W., An Analysis of Managerial Biasing: Evidence of a Company’s Budgeting Process, Journal of Management Studies (October 1968) pp. 304-315.Google Scholar
  41. Luckett, P.F. & Hirst, M.K., The Impact of Feedback on Inter-rater Agreement and Self-insight in Performance Evaluation Decisions, Accounting, Organizations and Society (1989) in press.Google Scholar
  42. Merchant, K.A., The Design of the Corporate Budgeting System: Influences on Managerial Behavior and Performance, The Accounting Review (1981) pp. 813-829.Google Scholar
  43. Merchant, K.A., Leadership Styles and Uses of Budgeting, Working Paper no. 83-49, Harvard University Graduate School of Business Administration (1983).Google Scholar
  44. Merchant, K.A., Influences on Departmental Budgeting: An Empirical Examination of a Contingency Model, Accounting, Organizations and Society (1984) pp. 291-307.Google Scholar
  45. Merchant, K.A., Organizational Controls and Discretionary Program Decision Making: A Field Study, Accounting, Organizations and Society (1985) pp. 67-85.Google Scholar
  46. Miles, R.E. & Snow, C.C., Organizational Strategy, Structure and Process (New York: McGraw-Hill, 1978).Google Scholar
  47. Mitchell, T.R., Cognitions and Skinner: Some Questions About Behavioral Determinism, Organizational and Administrative Sciences (1976) pp. 63-72.Google Scholar
  48. Mitchell, T.R., Organizational Behavior, Annual Review of Psychology (1979) pp. 243-281.Google Scholar
  49. Moser, C.A. & Kalton, G., Survey Methods in Social Investigation (New York: Heinemann Educational Books, 1979).Google Scholar
  50. Onsi, M., Factor Analysis of Behavioral Variables Affecting Budgetary Slack, The Accounting Review (1973) pp. 535-548.Google Scholar
  51. Otley, D.T., Budget Use and Managerial Performance, Journal of Accounting Research (Spring 1978) pp. 122-149.Google Scholar
  52. Otley, D.T., The Contingency Theory of Management Accounting: Achievement and Prognosis, Accounting, Organizations and Society (1980) pp. 413-428.Google Scholar
  53. Peterson, K.D., Mechanisms of Administrative Control over Managers in Educational Organizations, Administrative Science Quarterly (1984) pp. 573-597.Google Scholar
  54. Rockness, H.O. & Shields, M.D., Organizational Control Systems in Research and Development, Accounting, Organizations and Society (1984) pp. 165-177.Google Scholar
  55. Schiff, M. & Lewin, A.Y., Where Traditional Budgeting Fails, Financial Executive (May 1968) pp. 57-62.Google Scholar
  56. Schoonhoven, C.B., Problems with Contingency Theory: Testing Assumptions Hidden Within the Language of Contingency Theory, Administrative Science Quarterly (September 1981) pp. 349-377.Google Scholar
  57. Simons, R., Accounting Control Systems and Business Strategy: An Empirical Analysis, Accounting, Organizations and Society (1987) pp. 357-374.Google Scholar
  58. Stogdill, R.M., Manual for the Leader Behaviour Description Questionnaire (Columbus, OH: Bureau of Business Research, Ohio State University, 1963).Google Scholar
  59. Wood, S., A Reappraisal of the Contingency Approach to Organization, Journal of Management Studies (1979) pp. 334-354.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1990

Authors and Affiliations

  • Michael Briers
    • 1
  • Mark Hirst
    • 1
  1. 1.School of AccountingUniversity of New South WalesAustralia

Personalised recommendations