Budgetary Participation in a Non-Western Country
BUDGETARY PARTICIPATION IN A NON-WESTERN COUNTRY Anissa Dakhli, Paris X University, Nanterre The relationship between budgetary participation and job satisfaction has been examined in several accounting studies with conflicting results. The conflicting evidence may reflect the influence of contingency variables. The purpose of the present study is to examine the relationship between budgetary participation and job satisfaction, moderated by the personality variable, locus of control. In this study, Tunisian managers were selected, because Tunisia provides an interesting cultural contrast to the US, the birthplace of such budget practice, on two dimensions identified by Hofstede (1980) that are considered relevant to participative budgeting issues. The results of this study suggest that budgetary participation negatively affects job satisfaction. It supports, also, the moderator effect of the personality variable, locus of control. Internals appear more job-satisfied under conditions of high participation. On the contrary, Externals are more job-satisfied under conditions of low participation. This study highlights, notably, that budgetary participation would have different effects in different cultures. The effectiveness of the management planning and control systems used in developing countries remains an important issue for many reasons. As developing countries become more industrialized, progressive local firms may import systems and techniques from the more industrialized nations; indeed, such importation may be encouraged by educational institutions and consultants. Unfortunately, the progressive local firm may be importing systems from Volume 12 (2010-11) Budgetary Participation 2 the industrialized world without considering the potential impact of cultural differences on the success of implementing such systems. Support for the concern about the issues outlined above is found in current definitions of culture as a “shared reality” or shared “cognitive maps” (Adler, 1983; Hofstede, 1980, 1984). Through the socialization process, members of a group learn the premises that make up this “subjective culture.” These premises provide the essential basis for interpersonal relations leading to the effects described by Adler (1983): culture influences organizations through societal structures, such as laws and political systems, and also through the values, attitudes, behaviour, goals, and preferences of participants. Thus, the view of “reality” held by members of a group is expected to affect their perception of the budgetary process and the values that they place on participating in that process (Hofstede, 1983). In particular, the moderated relationship between budgetary participation and job satisfaction has attracted the interest of many researchers. Brownell (1982) examined the effects of participative budgeting and locus of control on performance and job satisfaction in a field setting. He found that a manager’s personality would mediate the effects that the budget participation process would have on job performance and job satisfaction. Using the work of Hofstede (1980, 1983) for hypotheses development, Frucot & Shearon (1991) theorized that culture might be an important variable in the budget participation-performance and budget participation-job satisfaction relationships. They tested the interrelationship of budget participation and locus of control (a personality variable) and their impact on job performance and job satisfaction of Mexican managers. They assumed that an organizational system such as budget participation would have different effects in different cultures. They suggested that foreign-owned 3 firms “may wish to exercise caution when applying participative budgeting techniques in Mexico” (p. 96). While there is a large body of prior research on the relationship between budget participation and job satisfaction, none has specifically focused attention on participative budgeting within any Arabic country, such as Tunisia. Nonetheless, it represents a fruitful area for managerial research. Tunisia is located in North Africa’s peak, where Europe, the Arab world and sub-Saharan Africa interact. This geographical position led to multiple invasions of Tunisia from the North and the East. Tunisia has also been influenced by many cultures. Economically speaking, this country has been very successful in achieving economic development (Zghal, 2008). The Tunisian society is at the same time protective of its national culture, open to modernity and receptive to adaptation. It has recently become strategically important to Western business. In their quest for economic progress, developing nations face major problems in improving the quality of work life, productivity and the standard of living. Studying work environment and other motivational factors is obviously imperative for the people of these developing countries, but it is equally critical for researchers in the general field, as developing nations assume a growing role in the overall world economy. As in many other rapidly developing nations, the Tunisian government has instituted extensive economic development programs designed to promote material growth and social justice. With the recent phenomenon of internationalization of competition, Tunisian companies had to improve their economic performance, by adopting sophisticated managerial tools, and their social performance, by taking more interest in their human resources. Thus, budgetary participation may serve to enhance Volume 12 (2010-11) Budgetary Participation 4 managerial job attitudes, such as job satisfaction, and consequently the performance of the manager who was involved in the budgetary system. Because of the strong cultural gap between Tunisia and Western countries, where modern managerial practices were born, these practices are likely to be inappropriate for Tunisian companies (Lassouad, 2008). In fact, importing management systems developed in industrial countries may create coherence problems. The study of the relationship between culture and management in Tunisia has a double interest. The first is the behaviors of companies in an environment motivated by a great willing to development and of course to change but which search, in the same time, to protect its cultural values. The second is in the importance of changes realized in all fields, which raise many questions about the origins and movements of Tunisian national culture, particularly in management and organization fields. The remainder of this paper is organized as follows: Section 1 examines the theory for the hypotheses development. Section 2 includes a brief description of Hofstede’s (1980) cultural dimensions. Section 3 outlines the research method employed and is followed by an analysis of the results of the hypothesis tests. The last section provides a discussion of the implications of the study, its limitations and suggestions for future research. 1. BUDGETING, PARTICIPATION, AND LOCUS OF CONTROL Participation can be broadly defined as an organizational process whereby individuals are involved in, and have influence on, decisions that have direct effects on those individuals. While participation can have many contexts and settings, one in particular has, in recent decades, been of great interest to researchers in 5 management accounting. This is the area of participation in budgeting, which can be more specifically defined as “a process whereby a manager has involvement and influence on the determination of his or her budget” (Poon et al., 2001:101). Why should management go for participation? Does it help increase productivity and improve industrial relations? Research literature indicates that participative management has many advantages for all who are involved in it, both supervisors and employees (Becker & Green, 1962; Swieringa & Moncur, 1975). On the management side, Shields and Shields (1998) identify information sharing and coordinating interdependence as key reasons for budget participation. Therefore, greater understanding of and willingness to implement efficient decisions would be assured. For operating managers, on the other side, major advantages include, among other things, higher work motivation and productivity and better industrial relations. Extensive research has been conducted in the area of participative budgeting. The results are inconsistent in explaining linkages between participative budgeting and outcome variables such as job satisfaction and job performance. In a related participative budgeting environment, Milani (1975) investigated whether (1) the degree of participation in budget-setting and performance are positively related, (2) the degree of participation in budgetsetting and attitude toward the job are positively related, and (3) the degree of participation in budget-setting and attitude toward the company are positively related. Results of the study indicate that there is no significant relationship between participation and performance. However, strong support exists for the relationship between participation and (1) attitudes toward the job and (2) attitudes toward the company. Kenis (1979) reveals that managers who participate in the budgeting process appear to be more satis- Volume 12 (2010-11) Budgetary Participation 6 fied than are their counterparts. In a similar vein, Merchant (1981) reported a strongly positive relationship between participation and both motivation and attitudes. However, Brownell (1982) found only weak evidence for positive effects of participation on job satisfaction. Yet, in spite of this long line of inquiry, the literature remains fraught with contradictions, overlap and a general lack of conclusiveness on the question whether participation is effective or not. Particularly concerning the effects of budgetary participation on job satisfaction, the results are difficult to integrate and often conflicting. Various researchers have suggested that the relationship between participative budgeting and job satisfaction might be contingent upon the presence of other moderating factors. Brownell (1982:124) advanced four major classes of variables (cultural, organizational, interpersonal and individual) that may influence the relationship between participation and its consequences. Internal-external locus of control was found by Brownell (1981) to influence the effects of participation. Rotter (1966) developed the “locus of control” construct. This refers to individual differences in a generalized belief in internal versus external control of reinforcement. Those with an external locus of control see themselves as relatively passive agents and believe that the events in their lives are due to uncontrollable forces. Externals feel that the things they want to achieve are dependent on luck, chance and powerful persons or institutions. They believe that the probability of being able to control their lives by their own actions and efforts is low. Conversely, those with an internal locus of control see themselves as active agents, feel that they are masters of their fates and trust in their capacity to influence the environment. 7 It is important to mention that prior research indicates that locus of control is a fundamental personality trait. These studies reveal that Internals are more satisfied than Externals when the budgetary process is participatory and that internal supervisors or managers are more participative in their budget-setting style. Brownell (1982) examined the effects of participative budgeting and locus of control on performance and job satisfaction in a field setting. Brownell’s results indicate that participation does not have a significant direct effect on job satisfaction, but that individuals’ locus of control has a moderating effect on the relationship between participation and job satisfaction. Using the work of Hofstede (1980, 1983) for hypotheses development, Frucot & Shearon (1991) tested the interrelationship of budget participation and locus of control (a personality variable) and their impact on job performance and job satisfaction. They assumed that an organizational system such as budget participation would have different effects in different cultures. Frucot & Shearon (1991) theorized that culture might be an important variable in the budget participation-performance and budget participation-job satisfaction relationships. Recently, Leach-Lopez et al. (2008) have examined the effects of budgetary participation and the personality variable, locus of control, on the performance and job satisfaction of Mexican managers working for US controlled maquiladoras on the US/Mexican border and within interior Mexico. This study, using the same methodology, finds empirical results similar to those of Frucot & Shearon (1991). Although it has attracted the attention of numerous researchers in Western countries, little consideration has been given to budgeting in developing countries, such as Tunisia. Thus, investigating such concepts will provide the basic information needed to develop a clear understanding for supervisor-employees’ Volume 12 (2010-11) Budgetary Participation 8 relationships in a non-Western context, which is not available currently. This paper tends to provide some support for a “contingent benefits” model of the effects of participation in the budgeting process. That is, the current research aims to investigate whether budgetary participation of Tunisian managers enhances their job satisfaction and whether the managerial locus of control, as a personality variable, moderates this effect. 2. TUNISIAN CULTURE AND BUDGETARY PARTICIPATION Hofstede (1980) identified four dimensions of culture: - Power distance (PD): A measure of the degree to which cultures prefer a more autocratic structure. In an organizational context, this translates into the degree of participation that would be favored. A country scoring high on this construct would prefer a less participative style. Hofstede (1980:92) provides evidence that, in a large PD society, “close supervision [is] positively evaluated by subordinates.” In a large PD society, subordinate consultation may not be as important as in a small PD society, because there is a tendency for the members of such a society to accept paternalistic management (Perera & Mathews, 1990). - Uncertainty avoidance (UA): A measure of the mean anxiety level. A high anxiety level translates into less willingness to take risks and a preference for security. According to Perera & Mathews (1990), the fundamental issue involved in this dimension is how a society reacts to the fact that the future is not known: whether the society tries to control the future or just lets it happen. 9 - Individualism: A measure of the relative importance of independence from the organization. Cultures scoring high on this construct stress goals and independence. Cultures scoring low on this construct favor more dependence on the organization. - Masculinity: A measure of the relative importance to the culture of income, recognition, and advancement as compared to the importance of work relations, cooperation and security. Some of the issues raised by this dimension are career expectations and acceptability of an autocratic manager (Perera & Mathews, 1990). 2.1 Legitimacy of Hofstede’s Approach in Tunisia There are at least two studies that can legitimate the use of Hofstede’s dimensions in the Tunisian cultural context. Ben Fadhel (1992) did a double validation. First, to find the four cultural Hofstede dimensions, he based his approach on the collective conscience, which is manifested through Tunisian proverbs. The second validation is based on a survey of 150 persons representing the global Tunisian culture. The factorial analysis confirmed the four cultural dimensions of Hofstede and added two dimensions, namely anxiety and tolerance. On the other hand, Zghal (1994), by studying the relationship between culture and organizational behaviors in Tunisia, identified three cultural dimensions likely to explain many behaviors that occur in Tunisian companies. She spoke about (1) the strong importance attached to values of equality and dignity, which correspond to the power distance dimension of Hofstede, (2) research and creation of unclear situations without any exact rules, which is related to the uncertainty avoidance dimension of Hof- Volume 12 (2010-11) Budgetary Participation 10 stede, and (3) the great value accorded to social relationships that correspond to the individualism/collectivism dimension. 2.2 Tunisian National Culture By studying the culture of certain Arab countries, Hofstede concluded that the Arab world is characterized by a great power distance, collective spirit, male tendency and high uncertainty avoidance. However, these results should be taken carefully for two reasons. First, scores attributed to different cultures are so old (data used as a basis for these scores referred to 1967 and 1973). Second, Arab culture is not homogenous: it is inconceivable to speak about one unified Arab culture. (El Louadi 2004). With reference to some studies that treated the Tunisian culture issue,1 we can conclude that Tunisian national culture presents some specificity that distinguishes it from the Arab world’s culture described by Hofstede. An acceptance of hierarchy, but with dignity: The importance of equality and dignity values in Tunisian culture is reflected in refusal of jobs dominated by others. These behaviors can be well explained in the Muslim religion, in which there is no mediation between God and human beings. This can also be seen in popular Tunisian sayings and proverbs, which assimilate working under others to servility (Zghal, 1991). This can produce a dilemma in reality between this equality notion wanted by Tunisian employee and submission in institutions and organizations. 1 El Louadi (2004), Soyah & Magroun (2004), Lassouad (2008), Langar (1998), Séror & Rejeb (1996), Ben Fadhel (1992), Zghal (1991). 11 According to Zghal (1991), Paternalism is presented as a current form of resolution of this dilemma. Thus, in the ArabMuslim family, the culture of obedience is obvious: it’s the father who has the absolute power (Eddakir, 2003), so children grow up in an atmosphere marked by a mixture of submission and respect. This model is reproduced elsewhere to govern relations between student and teacher, employee and boss, etc. This hesitation between refusing human inequality and respect for the hierarchy probably explains Tunisians’ attitudes that “always accept the hierarchy’s idea, but prefer a moderate position.” (Soyah & Magroun, 2004). As to delegation of authority, Zghal concluded that it is rarely practiced. Tunisian top managers think that their subordinates perform their tasks better when they have only to execute, without taking any initiative. They consider them as relatively passive agents, who seek only personal goals. Ben Fadhel (1992) confirmed this tendency by detecting at the same time features of high and low power distance. A weak collectivism: Tunisia is an Arab-Muslim country, where family and religion are the deep origins of social relations. These two institutions teach Tunisians values and norms of solidarity and affection. Zghal (1991) evoked the importance accorded, in Tunisian society, to different social relationships (family, region, tribe, school, etc.). On the other hand, an analysis of Tunisian popular proverbs, coupled with the survey’s results on a representative sample of Tunisian social tissue, shows a community tendency (Ben Fadhel, 1992). However, for some years, these collectivist values have tended to decrease. In fact, a recent survey (Lassouad, 2001) on organizational culture of Tunisian companies showed that collectivism is a value moderately spread and this Volume 12 (2010-11) Budgetary Participation 12 result may be due to the emergence of some individualist values in current Tunisian society. Another recent study (Soyah & Magroun, 2004) concluded that one cannot distinguish in an obvious way between individualist and collectivist tendencies of Tunisian people. This ambiguity can be explained, according to this research, by the culture of clans. Thus, members of one clan, of one family, are quite interdependent and cooperate together, while interactions between members of different clans are based on rational calculation. Moreover, in the Tunisian culture, strength and identity come essentially from personal achievement, then from group membership (Ben Fadhel, 1992). A male tendency : The Tunisian culture presents a certain balance between masculinity and femininity (Ben Fadhel, 1992), which is marked, for example, in the interest accorded to quality of life (a female value, according to Hofstede) as well as personal success (a male value, according to Hofstede). However, Tunisian society leans lightly toward male values, such as the desire to achieve personal performance (Ben Fadhel, 1992) and the importance given to work in a Tunisian employee’s life (Séror & Rejeb, 1996). A weak uncertainty avoidance: according to Zghal (1990, 1991), the Tunisian culture highlights a remarkable ambiguity in decisionmaking. This ambiguity is concretized by the absence of definite rules in problem solving and also by avoidance of rules, even if they exist, by high managers and their subordinates. A recent study (Yahiaoui, 2004) accentuates this Tunisian cultural specificity and enhances it by evoking the “maktoub” (destiny) belief toward uncertain situations. Ben Fadhel (1992) spoke about a tendency to accept the risks, which can be found even in popular proverbs and sayings. These features let us describe Tunisian 13 society as having weak uncertainty avoidance. Paradoxically, some sectorial studies conducted in Tunisia highlight a high degree of uncertainty avoidance. In fact, a case study of the telecommunications sector concluded that “Tunisian managers avoid ambiguity and are less willing to take risks when establishing and achieving their tasks” (Séror & Rejeb, 1996). Indeed, other studies conducted in the transport sector (Langar, 1998) and in banking (Soyah & Magroun, 2004) emphasized relatively high uncertainty avoidance. These results may be justified by the specificity of these sectors, which tend to minimize risk taking. Prior studies suggest that the cultural sub-dimensions of power distance and individualism may affect employee reactions to participation (Harrison, 1992). Of these two dimensions, the expectations derived from the level of power distance are clear (O’Connor, 1995:386). This is because the norms and values associated with this dimension refer to a society’s preference for a particular leadership style, which can be related to a preference for a high or low level of participation in the budget-setting process (Hofstede, 1984:397). High power distance is likely to affect employee reactions to participation unfavorably, because, in unequal societies, power is not shared between superiors and subordinates. In contrast, in low power distance societies, power is shared between superiors and subordinates, because societies value equality. By contrast, the expectations derived from the level of individualism in a society remain unclear. Participation has been argued as being culturally appropriate in both an individualist (Milani, 1975) and collectivist (Harrison, 1992) societal context.2 2 For an individualist society, the individual’s commitment to the organization can be seen as a calculative one. Here, participation is seen as culturally appropriate, because it provides a mechanism by which goals and standards set are internalized within the individual and, hence, the individual feels a greater Volume 12 (2010-11) Budgetary Participation 14 Tunisia has relatively high power distance and low individualism (Zghal, 1990, 1991, 1994; Ben Fadhel, 1992). Hence, the reaction of Tunisian managers to high participation is hypothesized to be unfavorable. An interaction among budgetary participation and manager’s personality affecting employee attitudes is expected. Therefore, the hypotheses tested in this study can be stated as follows: H1: In Tunisia, the degree of participation in the budgetary process leads to low satisfaction. H2: In Tunisia, there will be a significant interaction between budgetary participation and locus of control affecting job satisfaction. 3. METHOD 3.1 The Sample: In this study, a non-random method of sampling was adopted. Because of difficulties in access to Tunisian companies, family and friendly ties were used in order to facilitate the entry to these companies and therefore managers’ collaborations in the current study. Also, close relatives were consulted and asked whether they had contacts in Tunisian industrial companies. If these contacts existed, they would serve as bridges to middlemanagers, objects of the study, in each company. As a result, the final sample consisted of 75 middle-level managers working in 31 different Tunisian industrial companies, varying in size and sense of responsibility to achieve it (Milani, 1975). Consequently, employees develop greater motivation. For a collectivist society, participation is also seen as culturally appropriate (Harrison, 1992), due to the belief that group decisions are superior to individual decisions and that this is consistent with a preference for a participative type management style. 15 industry. The organizations ranged in size from 200 to 2236 employees. All companies were entirely Tunisian-owned. Data collection was restricted to middle-level managers, who were supposed to have some budgetary responsibilities, in each organization. The respondents represented four different functional areas, with 26 managers working in the financial area. All respondents had been with their organizations for at least two years. The mean age of respondents was 40 years old. 3.2 Data Collection: A questionnaire survey was used. The research started with a brief interview with a senior corporate official, such as the financial vice-president, controller, or director of planning and budgeting. This interview was used to gather data on the company (size, kind of industry...) and its corporate planning and budgeting systems and to identify a sample of middlelevel managers who were involved in budgeting. The managers were assured that the questionnaire was for research purposes only and that it would be anonymous. The questionnaires were personally distributed to 93 middle-level managers involved in the study, who kept them to complete on their own time. The completed questionnaires were then collected. Personal contacts with both the companies and the respondents led to an 83 per cent response rate. However, of the 78 questionnaires collected, three were excluded from the study for incomplete responses. The final sample size for hypotheses testing was reduced to N=75. 3.3 Variables Measurement: Three variables were measured by the questionnaire: budgetary participation, locus of control, and job satisfaction. Volume 12 (2010-11) Budgetary Participation 16 3.3.1 Budgetary participation. The six-item instrument of Milani (1975) was employed to assess budgetary participation. The instrument attempted to assess the respondent’s involvement in and influence on the budget process. The scale is additive, with the summed score providing a measure of the respondent’s perceived degree of participation in the budgeting process. Satisfactory reliability and validity for the scale have been reported by prior researchers (e.g., Brownell, 1982; Chenhall, 1986; Dunk, 1989; Frucot & Shearon, 1991, and O’Connor, 1995). In the current study, the Cronbach alpha coefficient is 0.95. 3.3.2 Locus of control. The internal-external scale questionnaire, developed by Rotter (1966), was employed to assess locus of control. It contains 29 questions that require a forced response between “internal and external” answers. This instrument is widely used in psychological and accounting researches and several extensive literature reviews attest to its validity and reliability (Swieringa & Moncur, 1975; Brownell, 1981, 1982). In this study, the Cronbach alpha coefficient is 0.80. 3.3.3 Job satisfaction. The Job Descriptive Index (JDI) of Smith et al. (1969) was chosen to assess job satisfaction. This instrument outperformed a satisfactory rate of validity (Kenis, 1979). It measures managerial satisfaction at five scales: the remuneration, the opportunity of promotion and advancement, the job itself, the relations with the supervisor, and the relations with colleagues. As for reliability of the scale, the Cronbach alpha coefficient is 0.88. 17 4. RESULTS As noted later, descriptive statistics for the independent variables and dependent variables are presented in Table 1. Table 2 presents the results of the regression analysis. The following model was used to test the hypotheses: SAT=a0 + a1 BP + a2LOC + a3BP*LOC + (1) Where SAT is satisfaction, measured using the JDI of Smith et al. (1969); BP represents standardized budgetary participation [(BPBP) ∕ σ BP]; LOC is a standardized locus of control score [(LOC – LOC) ∕ σ LOC]; BP*LOC is the multiplicative interaction term of budgetary participation and locus of control. Table 1: Descriptive Statistics for Measured Variables N Budgetary participation 75 Job satisfaction 75 Locus of control 75 Possible Actual Standard range range Mean deviation Variance 15-75 15/74 52.73 15.91 253.41 19-95 33/92 63.61 13.48 181.75 -15/15 -11/12 5.79 33.58 0.53 4.1 Budgetary Participation and Job Satisfaction The model (1) tests the effect of participation, locus of control and their interaction on job satisfaction. The interaction term matches the personality trait with the characteristics of the firm’s budgetary process. The results of the moderated regression Volume 12 (2010-11) Budgetary Participation 18 analysis are reported in Table 2. The participation coefficient is found to be significantly negative (-0.348) and hence supports, the expected sign. This suggests that participation, alone, exerts a substantial negative influence on job satisfaction of the Tunisian managers. This finding is not consistent with previous results (Milani, 1975; Kenis, 1979; Chenhall, 1986; Frucot & Shearon, 1991; Lopez et al., 2007; Lopez et al., 2008), which attest a positive association between the two constructs. However, it is in accordance with Hofstede’s framework, in which it was expected that Tunisian managers would prefer a non-participative budgetary structure. Thus, the first hypothesis is supported. 4.2 Moderating Effect of Locus of Control According to Sharma et al. (1981), to identify the presence and the kind of the moderator variable, two methods may be used: sub-group analysis and moderated regression analysis – ARM. In reality, these two methods are complementary, because the moderated regression analysis, standing alone, can detect only the presence or absence of an interactive effect. It does not reveal how this factor influences the direct relationship. For the present study, the two methods were combined, in order to determine whether there is any interaction between locus of control and job satisfaction and, if it exists, how it affects job satisfaction. As reported in Table 2, the interaction coefficient is significant at the 0.01 level. The coefficient for locus of control is positive, but fails to reach significance at any reasonable level. These results indicate that job satisfaction is associated with both locus of control and participation. 19 Table 2: Regression Results Coefficients Constant Budgetary participation Locus of control Interaction coefficient Adjusted R2=0.085 † p < .10 * p < .05 ** p < .01 Value -0.18† -0.34* Standard deviation 0.12 0.12 t -1.49 -2.80 0.17† 0.12 0.15 1.46 E02** 0.14 4.11 It is clear that there is a significant interaction between budgetary participation and locus of control in affecting job satisfaction. These results support the second hypothesis. 4.3 Further Analysis In order better to explore the second hypothesis, a subgroup analysis was performed, by dividing the sample into two groups (G1: Internals and G2: Externals).3 Then, a linear regression analysis was performed on each group. 3 The interviewee was classified as Internal or External based on his number of internals and externals responses. Thus, if most of his responses are externals, he will be classified as External and if the most of his responses are internals, he will be Internal. Volume 12 (2010-11) Budgetary Participation 20 SATI = β0+ β1BPI + Where SATI is standardized job satisfaction; BPI is standardized budgetary participation for internals. SATE = α0 +α1BPE + Where SATE is standardized job satisfaction for externals; BPE is standardized budgetary participation for externals. Table 3: Regression Results for Internals Coefficients β0 BPI Value 7.85E-02† 0.41** Standard deviation t 0.12 0.61 0.15 2.75 Adjusted R2 = 0.157 † p < .10 ** P < .01 Table 4: Regression Results for Externals Coefficients Value α0 -0.62** BPE -0.86** Adjusted R2 = 0.61 ** p < .01 Standard deviation t 0.13 -4.71 0.11 -7.36 21 As shown in Table 3 and Table 4, the participation coefficients are statistically significant and show the expected sign. They imply that satisfaction with the particular job-aspect is higher for Internals in high participation conditions and for Externals in low participation conditions. It seems that Internals are significantly more satisfied with high budgetary participation. However, Externals do not prefer this kind of budgeting system. 5. DISCUSSION AND CONCLUSION This study clearly demonstrates that managerial attitudes and behaviors vary according to organizational and individual backgrounds. It provides evidence that cultural differences may lead to different responses to participative budgeting and that various groups within a culture may react differently to a particular budgeting system. In terms of job satisfaction, in particular, the results tend not to support previous research findings in Western nations. They demonstrate that participation alone negatively affects the job satisfaction of Tunisian managers. This result is, clearly, not consistent with the findings of a number of studies that focused on the influence of budgetary participation on managers’ attitudes and behaviors. In particular, it does not support Brownell (1982)’s finding. This divergence may be attributed to cultural differences. At least two possible explanations can be imagined in attempting to justify this negative association: First, Tunisian top managers are likely practicing pseudo-participation and not real participation. A pseudo-participative process is defined as a budgeting process that leads subordinates to believe that they will have some influence on the budget that is set, but, in reality, their input is ignored (Libby, 1999). In the context of Arab culture, the pseudo- Volume 12 (2010-11) Budgetary Participation 22 participative phenomenon may exist for two reasons. (1) Many managers have been influenced by Western management philosophy and by the benefits of the participative approach. This has complicated management development, as the Arabs display an infatuation with ideal forms, even when they know these forms to be contradicted by reality (Abbas, 1989). Individuals are suffering, in general, from a problem of duality in thinking and practice. (2) The early childhood socialization process in the Arab culture provides fertile ground to prepare individuals to be oriented toward people, rather than toward material gains. Individuals are socially trained to participate in conversations and to take part in social ceremonies in early childhood life. As a person reaches the age of thirteen or fourteen years, however, he or she is trained more in playing strict social roles and in adhering to societal norms (e.g., obey authoritarian and older persons, listen and show respect). In this context, one would expect some tension to exist between the “ideal” (participative) and the “practical” (authoritarian). It’s likely, therefore, that a relatively high portion of Arab managers display preference for the pseudo-participative approach. The Pseudo-participation can have demotivating effects on subordinates and can lead to dysfunctional effects (Becker & Green, 1962; Libby, 1999). Second, as noted in studies focused on Tunisian culture (Zghal, 1991; Ben Fadhel, 1992), this negative association between budgetary participation and job satisfaction would appear reasonable and even expected. The Tunisian culture emphasizes rare delegation of power (strong centralization) and refusal of responsibilities. Based on Hofstede’s (1980) classification scheme, in Tunisia, a more paternalistic and autocratic leadership style (with less participation in decision making and more rules and centralization) would be preferred (Ben Fadhel, 1992). In addition, more 23 dependence of the individual on the organization is expected. In fact, the Arabic cluster of which Tunisia is a unit is classified as having high power distance and low individualism. In such a cultural climate, managers’ reactions to participation are expected to be negative (Harrison, 1992). Based on this study’s results, Tunisian firms may wish to exercise caution when applying participative budgeting techniques, perhaps by involving middle-level managers in the implementation process. Bourguignon et al. (2004) indicate that when a management technique (such as participative budgeting) is exported to a new cultural environment, implementation is more successful when the ideological framework (of which the culture is a unit) is coherent with the characteristics of that technique. “When management approaches are transferred and insufficient consideration is given to their ideological assumptions, they are likely to miss their objectives and to prove very disappointing. The importance of local ideology should be recognised, especially in the case of management systems created and developed in ideologically different environments.” (Bourguignon et al., 2004:109). The results support the expectation that participation is most effective for internally-oriented individuals. Tunisian Internal managers are satisfied under a participative budgeting system but Externals are not. The reactions of managers to budgetary participation differ clearly according to their personal traits. Internals, because they behave as active members of the group and aim to be involved in the decisional process of the company, prefer a participatory budgeting system, where they will have some influence on the budget that is set jointly. Thus, this participatory system gives them opportunities to influence the environment and be active agents in consequence. Also, External managers seem to refuse responsibilities. They prefer receiving and executing top Volume 12 (2010-11) Budgetary Participation 24 management’s orders. They even perform better under an autocratic decisional system. Thus, they react negatively to budgetary participation. The result of this study has practical as well as theoretical relevance. Some practical conclusions, which would lead to effective and successful organizations in the Tunisian context, are: (1) Management should create a positive environment, by focusing on the social relationships between employees and their supervisors and developing a clear job description to help employees understand what they have to do, along with allowing some real participation by the employees in making decisions. (2) When implementing budgeting systems, designers ought not to give high budgetary participation indiscriminately to subunit managers. They must consider the personal characteristics of managers involved in this budgeting system. As regards theory development, the results of this study suggest the fruitfulness of considering other contingency variables in researching the effects of participative budgeting. As Brownell (1982) argued, participation in the budgetary process might be contingent on four groups of variables: cultural, organizational, interpersonal and individual. Future research should focus attention on all four groups of contingency factors, in order to develop a comprehensive and integrated model specifying the conditions under which budgetary participation will produce favorable outcomes. Our study has common limitations found in this type of research. As the sample of this study was relatively small, the results of this study may not be generalized to Tunisian organizations in general. Each variable is measured with an established scale, but each of these scales contains some level of measurement error and each observation is dependant on the subject answering 25 truthfully and accurately. There is also the potential weakness of using self-reported measures of budget participation. Self-reported levels of participation may be more relevant than external measures of participation, because it should be the subject’s perception of budget participation that influences behavior. The survey approach as well has limitations, such as the lack of control over who responds to the questionnaires (Nouri & Parker, 1996). In the empirical model, SAT=a0 + a1 BP + a2LOC + a3BP*LOC + there are some control variables that may affect job satisfaction, such as working experiences, working functions, managers’ individual factors. I suggest that future research include some control variables to the model, in order to increase the internal validity of the study. Notwithstanding these limitations, this research provided supportive evidence of the need to recognize the existence of important moderating effects of the personality variable, locus of control, on the relationship between participation and job satisfaction. 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