Title: THE EFFECT OF PARTICIPATORY BUDGETING ON PERFORMANCE WITH ORGANIZATIONAL CULTURE AND COMMITMENT AS MODERATOR VARIABLES AT PT PERKEBUNAN NUSANTARA XII (PERSERO)
Authors: BAMBANG WIDJANARKO
Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya
Publisher: Universitas Airlangga
Abstract
Accounting researchers have long sought to understand the impact of participatory budgeting on managerial performance, and this debate has sparked considerable debate. This debate has sparked further research on the topic (Argyris 1952; Milani 1975; Kenis 1979; Brownell 1981; Brownell and McInness 1986).
Empirical evidence indicates an unclear relationship between participatory budgeting and managerial performance. The inconsistency of research results suggests that other variables influence participatory budgeting on managerial performance (Govindarajan 1986; Indriantoro and Supomo 1999). In these studies, participatory budgeting is the independent variable and managerial performance is the dependent variable, with a moderator variable added to determine the extent to which the independent variable improves the dependent variable. Murray (1990:105) adds that the moderator variable plays a role in influencing the level of relationship between the two variables. In this study, two moderator variables were used: culture and commitment.
Atmosoeprapto (2000:73) states that a strong organizational or corporate culture will influence the perception of work, making it more enjoyable. Therefore, its existence must be maintained so that all employees, from top management to the lowest level, have a strong commitment to the company, not just a physical but also an emotional one.
On the other hand, Festinger (1957) in Riyadi (1998) with cognitive dissonance theory stated that employees with higher commitment will correct mistakes or worry if their performance is low. To reduce these mistakes and feelings of worry, they voluntarily try to improve their performance (Calder and Ross, 1976; Hamner and Organ, 1978) in Riyadi (1998). Conversely, this is not the case for employees with low commitment.
The objectives to be achieved in this research are to find out: (1) The influence of participatory budgeting on the performance of the Strategic Business Unit, (2) Participatory budgeting with PTPN XII's organizational culture as a moderator variable will further improve the performance of the Strategic Business Unit, (3) Participatory budgeting with commitment as a moderator variable will further improve the performance of the Strategic Business Unit.
The population taken in this study is 34 strategic business unit managers with the following provisions: 1. Each strategic business unit manager leads and manages a strategic business unit in the working area of PTPN XII (Persero); 2. Each unit manager is responsible for achieving the health level of the strategic business unit and in turn will be the basis for assessing the performance of the individual or strategic business unit manager concerned; 3. They are all managers one level below the Board of Directors and have operational land.
The conclusion produced in this study is that there is an influence of participatory budgeting on the performance of strategic business units; the influence of participatory budgeting variables with organizational culture as a moderator variable can significantly improve the performance of strategic business units; and the influence between participatory budgeting variables and the commitment of strategic business unit managers as a moderator variable can significantly improve the performance of strategic business units.
The useful suggestion for PTPN XII (Persero) related to the results of this study is that participatory budgeting which is realized as the involvement of business unit managers in the preparation of work plans and company budgets needs to be maintained and improved more openly in the sense of involving more levels of management under the strategic business unit manager, as an effort to improve the performance of strategic business units and to achieve the company's overall goals, including the performance of the business unit managers themselves and their staff. In addition, to produce optimal performance of strategic business units and PTPN XII (Persero), the culture of PTPN XII (Persero) and employee commitment, especially managers at all levels, must also be maintained and consistent and well maintained because management participation in the preparation of work plans and company budgets or participatory budgeting supported by organizational culture and commitment is proven to improve the performance of strategic business units.
Although PTPN XII (Persero) already has a good corporate culture and is supported by committed employees, this should not make PTPN XII (Persero) management satisfied with such a situation. It must be realized that everything that has been built in the past will become outdated if not updated. For this reason, PTPN XII (Persero) in the future must be able to build a superior organizational or business culture based on plant cultivation and develop employee commitment to PTPN XII (Persero) in facing increasingly turbulent changes so that it is able to compete and can realize the company's vision and mission.
This study discusses performance only from the company's perspective, specifically the performance of strategic business units. However, future research could focus more specifically on the performance of individual strategic business unit managers by developing Key Performance Indicators (KPIs) to serve as the basis for developing tiered management contracts.
Keywords: Budget participation, organizational culture, commitment, performance and strategic business unit
Sources: http://repository.unair.ac.id/36140/