International journal of Contemporary Business Studies

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International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com factors and achieve competitive advantage (Mia & Clarke, 1999).Similarly, Shields & Shields (1998) find that in situations of low competitiveness, decisions become more routine. In these circumstances, the decisions of leaders themselves as the obvious solutions and considered wasteful of time. Therefore, these managers are less satisfied in their mission if they become involved in the preparation of budgets. Therefore, one can conclude that under conditions of low competitiveness, managers will be less incentive to participate in the process of preparing the budget (Powell, 1992). It is possible that a high level of participation is inconsistent with the organizational structure and business environment; this is due to a low level of performance (due to wasted time and effort of managers) and dissatisfaction at work. In another side, if the intensity of competitiveness is strong, managers may need additional information relevant to the complexities of the external market environment (Brownell, 1983; Kren, 1992; Tsui, 2001). The works of Kren (1992) and Chong & Chong (2002b) show that budgetary participation provides a convenient opportunity for leaders to gather relevant information to make informed decisions. Thus we assume that a high level of competitive market, managers participating in the budget process, seeking more information. This opportunity allows them to increase their satisfaction because their participation is a tool to express their values (Shields & Shields, 1998, p. 59). Hence, the first hypothesis could be formulated as follows: Hypothesis 1: The direct effect of budgetary participation on organizational performance is low. Both assumptions are made and are based on a literature review using the budgetary participation as an independent variable, taking a comprehensive approach to this variable (dimensional scale of the variable budgetary participation). However, in seeking to identify the true extent of participation that influences organizational performance in the presence of competitive conditions (high or low), we adopt a more dimensional approach to the budgetary participation (Hassel & Cunningham, 1993, 1996; Chong & al., 2005).The dimension "involvement" of budgetary participation is defined as the extent of information exchanged between managers regarding the factors affecting their budget. While the dimension "influence" means the level of influence on manager for the determination of his budget (Hassel & Cunningham, 1993, 1996). Given the bi-dimensionality of the budgetary participation, we make the following assumptions: Hypothesis 2: There is a positive relationship between the dimension "involvement" of budgetary participation and organizational performance when there is a high level of competitiveness. Hypothesis 3: There is a positive relationship between the dimension "influence" of budgetary participation and organizational performance of the company when there is a high level of competitiveness. 3. RESEARCH METHODOLOGY 3.1. Data collection and sample characteristics This study employed a questionnaire survey method to collect data. A sample was composed from 89 top managers from companies in the industrial sector.The administration of the survey questionnaire consisted of the following steps. First, a questionnaire with a cover letter explaining the objective of the study and a reply paid self-addressed envelope were mailed to Copyright © 2012. Academy of Knowledge Process 40
International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com each manager. The survey questionnaire asked them to provide data for three variables namely: intensity of market competition, budgetary participation, and organizational performance. Of the 113 questionnaires distributed starting at 113 Tunisian companies, 93 responses were obtained. These responses have been purified to reach a final sample of 89 industrial companies in Tunisia. The characteristics of target companies and managers are summarized in Table 1 and Table 2 Table 1. Characteristics of the companies Companies 89 Number of employees 50-100 100-200 >200 15 29 45 Table 2. Characteristics of the managers managers Service held Years of experience in current position Financial or Others 8years 89 Accounting 79 10 14 5 28 23 19 3.2. Variables measurement and reliability of constructs 3.2.1. The dependent variable: Organizational Performance The major challenges in measuring organizational performance lived in three levels. First is the validity of the construct of organizational performance. The second is the relationship between the purpose of research and the proper definition of organizational performance that can give a proper measure of this variable. Is it is a measure against a market accounting measure, a financial measure against a non-financial measure or a measure based on objective criteria against subjective criteria? Referring to the study of Venkatraman (1989), organizational performance is defined as the effectiveness and efficiency of the elements may affect the profitability and growth of organizations. From this definition, Desphandé et al. (1993)‟ measure of organizational performance based on the following six items: a prosperous, market share, the rate of growth, profitability and innovation (Appendix A). Table 3. Factor analysis for Organizational Performance Items Factor Loading PO1 a 0.728 PO2 0.603 PO3 0.851 PO4 0.724 PO5 0.533 Extraction Method: Principal Components Analysis Only one dimension is extracted Cronbach reliability coefficient = 0.795 b b results from SPSS.17 output a PO1, … PO5 are the items measuring Organizational Performance Copyright © 2012. Academy of Knowledge Process 41
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