Proceedings

found that for large, divers, and decentralized organizations stress on sophisticated
and participative budgets is of high importance. Gul et al. (1995) found some
confirming evidence regarding the association between decentralization and
participative budgeting in Hong Kong companies. The results of another study
confirmed also the facilitative role of decentralization to boost budgeting practices
such as participative budgeting in the public sector of a developing country (Awio and
Northcott, 2001).
Also environmental hostility has a significant relationship with putting more stress on
performing in the boundaries of budgets (Otley, 1978). Financial pressure might be
alleged as an external restriction and hostility from the Government on Iranian
universities. In more hostile environment resulted from resource limitations and
intense competitions, there will be much more reliance on formal control (Imoisili,
1989). No direct evidence could be found to confirm the negative association between
financial pressure and participative budgeting, however several papers have looked at
the effects of participative budgeting and budgetary slack (Young, 1985, Awasthi,
1988, Dunk, 1993a, Van der Stede, 2000, Davila and Wouters, 2005, Kren and Maiga,
2007). On the other side, it has been confirmed that rigid budget control could
negatively affect the slack in budgets (Merchant, 1985a, Dunk, 1993a). If
aforementioned relationships are true, it is expected that budget constraints would
hamper the participative budgeting practices. So it seems reasonable to propose
hypotheses 2 and 3 as below.
H2. Universities which are (a) more “decentralized” and (b) facing “higher financial
pressure” put more “emphasis on budget control”.
H3. “Participative budgeting” in Iran’s universities are (a) positively associated with
“decentralization”, but (b) negatively with “financial pressure”.
1.4. Effect of accounting and budgetary system on performance (H4 to H6)
It seems evident as well as has been claimed by many researchers that accessing to
more information would assist managers to make decision much more effectively (for
example see: Chenhall, 2003, Baines and Langfield-Smith, 2003). Cadez and
Guilding (2008) found that there is a positive association among the degree of usage
of strategic management accounting techniques and performance. Several researchers
have proposed that in an uncertain environment, the information provided by
management accounting system is much more useful (for example see: Gordon and
Narayanan, 1984). Competition has been identified as an index of uncertain
environment (Mia and Clarke, 1999). Simons (1990) doing a two year field study in
two competing companies, tried to investigate the extent and process of formal
management control system effects on strategy formulation to be assured that
competitive advantages would be saved. It is almost an accepted expectation of
accounting systems as a part of management control system to help organizations in
gaining competitive advantages (Bromwich, 1990). Then following hypothesis is
suggested:
H4. “Universities’ departmental performance” is (a) positively related to “improved
accounting system” (b) mediating by “competitive advantage”.
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