Van der Stede, Wim A. 
ORCID: 0000-0003-3005-2410
(2000)
The relationship between two consequences of budgetary controls: budgetary slack creation and managerial short-term orientation.
Accounting, Organizations and Society, 25 (6).
609 - 622.
ISSN 0361-3682
Abstract
Previous studies have provided contradictory evidence with respect to the effect of rigid budgetary controls on slack and other dysfunctional behaviors. One motivation for the current study was to test whether spillover effects exist between two alleged dysfunctional consequences of a rigid budgetary control style: budget slack creation and managerial short-term orientation. The data support this contention: reducing one form of dysfunctional behavior (slack creation) through rigid controls seems to spill over into another form (stronger management focus on business matters that affect short-term results). However, the budgetary control styles that organizations implement, as well as the behaviors that they encourage, may be affected by two important antecedents: business unit past performance and competitive strategy. The results indicate that business units that either pursue a differentiation strategy or have been more profitable are subject to less rigid budgetary controls, which augment the propensity to build slack as well as the tendency for managers to think long-term. These relationships are tested in a structural equation model on survey data obtained from 153 business unit general managers.
| Item Type: | Article |
|---|---|
| Additional Information: | © 2024 The Author |
| Divisions: | LSE |
| Subjects: | H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management |
| Date Deposited: | 10 Jun 2024 13:36 |
| Last Modified: | 12 Dec 2024 04:19 |
| URI: | http://eprints.lse.ac.uk/id/eprint/123822 |
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