Modelling the role of strategic planning, strategic management accounting information system, and psychological factors on the budgetary slack

ABSTRACT

This study aims to identify the mediating role of strategic management accounting systems, autonomous budget motivation, and affective organisational commitment on the relationship between management participation in strategic planning and budgetary slack variables. It also further extends the topic to multi-layer management contingency theory via agency theory and stewardship theory. By applying structural equation modelling in a public health and medical services setting, the study concludes that the participation of all managers not only does not reduce budgetary slack, but increases it; strategic management accounting systems and affective organisational commitment act as mediating factors, though the autonomous budget motivation cannot perform such a role. Further, for higher level managers, only the strategic management accounting system shows a significant effect on budgetary slack. Evidence regarding middle managers confirms the significant effect of the mediating role of strategic management accounting systems and for operating managers, only affective organisational commitment reduces budgetary slack. Therefore, management levels posit a significant contingency effect on constructs affecting budgetary slack. By identifying the mediator variables, the study extends budgetary slack theory and provides empirical evidence for each level of public health and medical services management.

KEYWORDS:

• Budgetary slack
• strategic management accounting
• autonomous budget motivation
• Iranian public health and medical services
• contingency theory

Acknowledgements

We would like to express our sincere thanks and appreciation to the editor of the journal, Professor Sumit K. Lodhia, for his great comments and cooperatin, and unanimous reviewers for providing their valuable guidance, which helped us extensively to revise the article. We also appreciate comments received by professors Shokrollah Khajavi, Mohammad Hosseyn Setayesh, and Amin Nazemi in the earlier version of this article. The cooperation of the MOHME in this study is also appreciated.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 It should be noted that the percentage of payment by each of these groups depends on various factors (e.g. type of insurance, type of disease, etc.).

2 In an untabulated test, we used one-way ANOVA to investigate whether the difference between the means of variables at different levels of management was statistically significant. The results of this test showed that only for variables MPSP (with F = 3.805 & sig. = 0.023) and environmental uncertainty (with F = 4.943 & sig. = 0.007) at 95% confidence level, there is a significant difference. More specifically, upper managers were more involved in strategic planning than middle managers and middle managers more than operational managers. Middle managers also placed more emphasis on environmental uncertainty than others.

3 Due to the limited possibility of reporting all the results related to establishing assumptions and testing simple models (statistical tests of the individual paths), only the results related to testing the final research models are presented.

4 Note: In this Figure and next figures, MPSP: Management Participation in Strategic Planning; SMAS: Strategic Management Accounting System; AOC: Affective Organisational Commitment; and BS: Budgetary Slack.

5 It should be noted that mediator path affective organisational commitment is through variable SMAS (path MPSP- affective organisational commitment -SMAS- budgetary slack).