Effects of enabling characteristics of budgetary control

Abstract

This study evaluates the effects of the enabling characteristics of budgetary control on managerial performance and commitment to budgetary goals. The results contribute to the literature by exploring a significant theoretical gap regarding the specific effects of enabling budgetary control characteristics on managers' commitment to established budgetary goals and their subsequent effects on managerial performance, revealing how such practices impact these managerial attitudes. The enabling approach to budgeting provides managers with greater flexibility and autonomy in organizational processes; therefore, it is relevant to understand how these characteristics influence attitudes related to managers' commitment to established goals and the consequences for their performance. The findings indicate that this does not occur uniformly, which provides an explanation to the field of study and reveals that the enabling approach enhances the acceptance and commitment of managers with budgetary responsibility toward desired organizational objectives, goals, and results. Managers with a higher commitment to goals are more likely to improve their managerial performance. The results indicate under which conditions the adoption of such budgetary control structures reflects positively on goal commitment and managerial performance. This is a descriptive, survey-based (single entity), and quantitative study conducted with 91 middle-level managers with budgetary responsibility. Structural Equation Modeling (SEM) was used to test the hypotheses. The results add new evidence regarding the enabling characteristics of budgetary control, revealing that flexibility in the budgeting process has positive effects on achieving better levels of managerial performance. They also indicate that internal transparency acts by promoting managers' commitment to achieving budgetary goals, which reflects positively on managerial performance. Furthermore, the findings suggest that individuals in positions closer to top management are more likely to perceive enabling characteristics, and that the level of budget use for performance evaluation strengthens goal commitment.