The Effect of Organization Commitment and Procedural Fairness on Participative Budgeting and Its Implication to Performance Moderating by Management Accounting Information (A Survey on Province Local Government Unit Agencies of West Java)

Headnote

ABSTRACT

This study aims to examine: 1) the influence of organization commitment on participative budgeting; 2) the influence of procedural fairness on participative budgeting; 3) the influence of organization commitment on performance; 4) the influence of procedural fairness on performance; 5) the influence of participative budgeting on performance; and 6) the influence of participative budgeting on performance moderate by management accounting information.

The research method used in this research was descriptive and verificative research. Population target in this research was 55 Local Government Unit Agencies (SKPD) in West Java Province. The primary data were collected by questionnaires and the reports of the evaluation of performance accountability were used as secondary data. Validity and reliability of questionnaires were tested before examining the hypotheses. Structural Equation Modelling with Partial Least Square was used as the analysis technique in this research.

The research findings : 1) organization commitment have positive and significantly affect the participative budgeting; 2) procedural fairness have positive and significantly affect the participative budgeting; 3) organization commitment have positive and significantly affect the performance; 4) procedural fairness have positive and significantly affect the performance; 5) participative budgeting have negative and significantly affect the performance; and 6) participative budgeting moderated by the management accounting information have negative and does not significantly affect the performance.

Keywords: Organization Commitment, Procedural Fairness, Participative Budgeting, Management Accounting Information, Performance

1.1. INTRODUCTION

Researches on the relationship of participative budgeting to performance have been conducted with various results among researchers; some have concluded that participative budgeting has a significant positive relationship with performance, participative budgeting has positive relationship no significant with performance, participative budgeting has a significant negative relationship with performance, and participative budgeting has negative relationship no significant with performance.

It is directs researcher to conduct further studies to investigate the factors that influence the participative budgeting, in this case the organizational commitment and procedural fairness. As suggested by Shield and Shield (1998) that it is important not only to understand the impact of participative budgeting, but also to determine the factors that influence participative budgeting it self.

This study was also conducted using contingency approach (Govindarajan, 1986), management accounting information as a moderating variable in the relationship between participative budgeting with performance.

Performance evaluation conducted by the Ministry...