commit to user
ANTECEDENTS OF BUDGETARY PARTICIPATION:
ENHANCING EMPLOYEES’ JOB PERFORMANCE
THESIS
A thesis submitted in partial fulfillment of the requirement for the degree of Magister Sains
by :
FATMAWATI NIKMAH
NIM: S 4307067
FAKULTAS EKONOMI UNIVERSITAS SEBELAS MARET
commit to user
ANTECEDENTS OF BUDGETARY PARTICIPATION:
ENHANCING EMPLOYEES’ JOB PERFORMANCE
By:
commit to user
ANTECEDENTS OF BUDGETARY PARTICIPATION:
ENHANCING EMPLOYEES’ JOB PERFORMANCE
By:
commit to user
STATEMENT
Name : Fatmawati Nikmah
NIM : S4307067
Study Program : Master of Accounting
Main Interest : Public Sector Accounting
I declared truthfully that this thesis entitled “Antecedent Budgetary
Participation: Enhancing Employees’ Job Performance” is originally made by the researcher. The things related to other people’s works are signed as citation
commit to user
DEDICATION
My Parents,
Thank’s for the love and support... You give me strength and brave to face the world
My Brothers and Sister, Thank you for your support and suggestion...
All of my friends,
commit to user
MOTTO
· All our dreams can come true, if we have the courage to pursue them....
· Trust in God, everything will be okey...
commit to user
ACKNOWLEDGEMENT
Assalaamu’alaikum Wr. Wb.
Alhamdulillah, Researcher thanks to presence of ALLAH SWT for the
overflows of blesses, grants, and guides so that Researcher able to finish this
thesis well. This thesis is compiled to equip the duties and fulfill the preconditions
to get the Master of Science degree in Faculty of Economics, University of
Sebelas Maret Surakarta.
Researcher realizes that during the thesis process, there are many helps
from other parties, directly and indirectly. Herewith, Researcher says many thanks
to various the following parties:
1. Minister of National Education of Indonesian Republic, for the willingness to
give grants in the form of scholarship “Beasiswa Unggulan Diknas”, in order
to complete the study in Master of Accounting Study Program, Faculty of
Economic, University of Sebelas Maret Surakarta.
2. Prof. Dr. Bambang Sutopo, M.Com., Ak., as The Dean of Faculty of
Economics, University of Sebelas Maret Surakarta and also as the main
counselor, thank you for all the guidance, inspiration, help, motivation,
critique, and suggestion that help the researcher to achieve the best result.
3. Mr. Bandi, Dr., M.Si,Ak, as The Head of Master of Accounting Program,
Faculty of Economics, University of Sebelas Maret Surakarta. Thank you for
give me the chance to study in MAKSI. I am happy to be part of MAKSI’s
commit to user
4. Christiyaningsih Budiwati, S.E., M.Si, Ak, as the co-supervisor, for all the
guidance, help, motivation, critique, and suggestion that help the researcher to
finish this thesis. Thank you very much for your kindness and help. Without
your guidance, I can’t finish my thesis research.
5. Dra. Y. Anni Aryani, M. Prof. Acc., Ph.D., Ak and Drs. Muhammad Agung
Prabowo, M.Si.,Ph.D., Ak.as the examiners, thank you for the critique and
suggestions.
6. Drs. Hasan Fauzi, MBA. Ak, for opening the gate for me to study in this
faculty by accepting me in MAKSI International Class. I also want to say my
deeply thanks and appreciation for all your guidance, support, and motivation
during study in MAKSI.
7. Mr. Doddy Setiawan, S.E., M.Si., IMRI., Ak., Thank you for give me the
chance to study in MAKSI. I am happy to be part of MAKSI’s family.
8. The officials of Local Government of Surakarta who fill the questionnaires,
Thank you for the time, help, guidance and being my respondent.
9. Admission Staff, in Economics Faculty, University or Sebelas Maret
Surakarta thanks you for helping me to finish my study.
10. My family. Thank you for helping me doing my research and supporting me to
finish my study.
11. My best friends, Lisa, Mulia Dewi, Eny Ellyanora, thanks for the friendship.
commit to user
12. All of MAKSI’s students that I couldn’t write one by one. Hope this moment
will be our memorable moment for us. I love you all guys and I hope we can
walk together and still be Friendship.
Researcher realizes that this thesis is a long way off from perfection.
Hence, researcher expects all the constructive suggestion and criticism regarding
the content, grammar, or any other. Finally, researcher wants to apologize if there
are mistake and weakness in this thesis.
Wassalamu’alaikum. Wr. Wb.
Surakarta, May 2010
Regards,
commit to user
TABLE OF CONTENT
Page
APPROVAL PAGE ... ii
STATEMENT ... iv
DEDICATION PAGE... v
MOTTO PAGE ... vi
ACKNOWLEDGEMENT ... vii
TABLE OF CONTENT ... x
LIST OF TABLE ... xiii
LIST OF FIGURE... xiv
LIST OF APPENDIX ... xv
ABBREVIATIONS ... xvi
ABSTRACT... xvii
CHAPTER I. INTRODUCTION... 1
A. Research Background... 1
B. Problem Statement ... 5
C. Research Purpose ... 6
D. Research Benefits ... 6
CHAPTER II. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT ... 7
A. Literature Review... 7
1. Budgeting Process in Local Government... 7
commit to user
3. Need For Achievement ... 13
4. Work Attitudes ... 17
5. Employees’ Job Performance... 21
6. Need for achievement, work attitude and job performance ... 23
B. Hypothesis Development ... 24
1. Need For Achievement and Budgetary Participation... 24
2. Work Attitudes and Budgetary Participation ... 26
3. Budgetary Participation and Employee’s Job Performance ... 27
C. Conceptual Schema ... 28
CHAPTER III. RESEARCH METHOD ... 30
A. Research Design... 30
B. Population, Sample, and Sampling Technique... 30
C. Data Collection... 31
D. Variables and Operasional Definitions ... 32
E. Analysis Technique ... 34
1. Descriptive Statistic ... 35
2. Validity and Reliability Test ... 35
3. Hypotheses testing ... 36
CHAPTER IV. DATA ANALYSIS AND DISCUSSION ... 39
A. Data Description... 39
1. Sample Selection... 39
commit to user
B. Reliability Test ... 41
C. Validity Test ... 42
D. Classic Assumption Analysis ... 43
E. Hypothesis Testing... 48
CHAPTER V. CONCLUSION AND RECOMMENDATION... 59
A. Conclusion... 59
B. Implications ... 60
C. Research Limitations... 60
D. Suggestions... 61
REFFERENCES ... 62
commit to user
LIST OF TABLE
page
Table 1 The amount of SKPD in Local Government of Surakarta... 31
Table 2 Questionnaire Description ... 40
Table 3 Descriptive Statistic of the Variables ... 41
Table 4 Reliability Result ... 42
Table 5 Validity Result ... 43
Table 6 Multicollinearity test result... 44
Table 7 Multicollinearity test result... 44
Table 8 Result of One-Sample Kolmogorov-Smirnov test... 47
Table 9 Result of One-Sample Kolmogorov-Smirnov test... 47
Table 10 Pearson correlation matrix ... 49
Table 11 Results of regression analysis using equation (1)... 50
(Dependent variable: Budgetary Participation) Table 12 Results of regression analysis using equation (2)... 51
commit to user
LIST OF FIGURE
Page
Figure 1 Local Government Budgeting Arrangement Cycle ... 10
Figure 2 Conceptual schema ... 29
Figure 3 Scatterplot Graphic ... 45
Figure 4 Scatterplot Graphic ... 46
commit to user
LIST OF APPENDIX
Page
APPENDIX I. Reliability test ... 67
APPENDIX II. Validity test ... 76
APPENDIX III. Multicolinearity test ... 86
APPENDIX IV. Heteroskedasticity ... 90
APPENDIX V. Normality test ... 96
APPENDIX VI. Regression test... 103
APPENDIX VII. Result of T-Test... 107
APPENDIX VIII. Regression Analysis for two sub samples ... 109
commit to user
ABBREVIATIONS
APBD : Anggaran Pendapatan dan Belanja Daerah
DPRD : Dewan Perwakilan Rakyat Daerah
KUA : Kebijakan Umum Anggaran
PPAS : Prioritas dan Plafon Anggaran Sementara
RAPBD : Rencana Anggaran Pendapatan dan Belanja Daerah
RKA : Rencana Kerja dan Anggaran
RPJPD : Rencana pembangunan Jangka Panjang Daerah
RPJMD : Rencana Pembangunan Jangka Menengah Daerah
RKPD : Rencana kerja Pemerintah Daerah
SKPD : Satuan Kerja Perangkat Daerah
commit to user
ABSTRACT
FATMAWATI NIKMAH NIM: S 4307067
ANTECEDENTS OF BUDGETARY PARTICIPATION: ENHANCING EMPLOYEES’ JOB PERFORMANCE
This research investigated the antecedent budgetary participation (need for achievement and work attitude), then assess the impact on employees’ job performance.
The data were obtained using questionnaires that distributed to respondents. Seventy two respondents were chosen as samples and path analysis was used as techniques to analyze the data.
The result of this research showed that need for achievement has significant positive association with budgetary participation. However, the result found that there is no significant association between work attitude and budgetary participation. Furthermore, the researcher found that budgetary participation had a significant positive association with job performance (e.i managerial performance). The researcher concludes that when employees have a higher need for achievement, they will tend to higher participation in budgetary process, and this condition will enhance employees’ job performance. Here, budgetary participation acted as mediating variable between need for achievement and job performance.
commit to user
Penelitian ini bertujuan untuk meneliti variabel anteseden dari partisipasi anggaran (kebutuhan berprestasi dan sikap kerja), kemudian menilai pengaruhnya terhadap kinerja pegawai.
Data pada penelitian ini didapatkan dari kuesioner yang telah disebarkan kepada responden. Tujuh puluh dua responden digunakan sebagai sampel dan analisis jalur (path analysis) digunakan untuk menganalisa data.
Hasil dari penelitian ini menunjukkan bahwa variabel kebutuhan berprestasi mempunyai hubungan positif yang signifikan terhadap partisipasi anggaran. Namun demikian, hasil penelitian menemukan tidak ada hubungan yang signifikan antara sikap kerja dengan partisipasi anggaran. Selanjutnya, peneliti menemukan bahwa partisipasi anggaran mempunyai hubungan positif yang signifikan terhadap kinerja pegawai (kinerja managerial). Peneliti menyimpulkan bahwa ketika mempunyai kebutuhan berprestasi yang tinggi, maka mereka cenderung mempunyai partisipasi yang tinggi dalam proses penganggaran, dan hal ini akan meningkatkan kinerja pergawai. Dalam hal ini, partisipasi anggaran sebagai variabel mediasi/perantara antara variabel kebutuhan berprestasi dengan kinerja pegawai.
commit to user
CHAPTER I
INTRODUCTION
A. Research Background
Budgeting in public sector organization is political process. Thus, budget
is an accountability instrument for public funding management and
implementation of programs which cost by public fund (Mardiasmo 2005). In
other words, public budgeting can be defined as financial condition of
organization that includes revenue, expenditure, and activities (Ompusunggu and
Bawono 2006).
Public sector budgeting is related with the process to decide the amount of
fund allocation for each program and activity in monetary unit, which using public
fund (Sardjito and Muthaher 2007). The stage of budgeting process is important,
because ineffective budget which is not performance-based oriented, will make
the predetermined planning can be failed. Budget is managerial plan for action to
facilitate the organization to achieve its goals (Rahayu, Ludigdo, and Affandi
2007).
Budget is a tool for government to direct the social-economy development,
to assure continuity, and improve the quality of society life (Mardiasmo 2005). In
order to obtain a good outcome of local government budget for society, the
participation of stakeholder in budgetary process is needed. Budgetary
participation in public sector occurred when among legislative, executive, and
commit to user
government which the proposal come from institution units that made by manager
unit. After thus, the draft of local government budget will be established by
executive with local government legislative (DPRD) based on the government
regulation (Halim 2007).
Local Government Budget (APBD) comes into arrangement relied on
performance approach, particularly pertained to a budget system focusing on
output achievement from pre-determined cost or input allocations. Regarding to
this performance approach, APBD must be targeted into objective achieved for
one budget year. Based on the Minister of Domestic Affair’s Regulation No.
13/2006 that covered the standard of local government budget draft formulation,
the proposal of local government budget arranged by executive budget team and
local government institution units (Satuan Kerja Perangkat Daerah/SKPD). Here,
the each manager unit (SKPD) has an important role for compiling the
program-related budget form their own unit as a part of the whole local government
budgeting (APBD). Thus, in performance-based budgeting process, each
institution unit should be involved in budgeting process; it means more employees
have allowed participating in budgetary activities.
Thompson as cited in Williams et al. (1990) challenged researchers to
examine budgetary behavior in such public sector organizations, as the budgetary
behavior may be different in these organizations compared to the behavior in
profit-making and less bureaucratic organizations. Similarly, Williams et al.
(1990) suggested that future budgetary participation and performance research in
commit to user
behavior factors which apply with equal facility to both sectors, but that particular
combinations dominate depending on the state of other organizational variables.
Moreover, the budgetary behavior in public sector organizations in the developed
countries might be different from what is observed in developing countries.
Furthermore, many of the prior studies on the budgetary participation and
performance relationship have produced conflicting results. Empirical evidence on
the relationship between budgetary participation and performance has been
offered by several researchers. Some studies have found a positive relationship
between budgetary participation and job performance (Nouri&Parker 1998;Yuen
2007;Yahya et al 2008). Other studies have suggested that there is a weak positive
relationship (Milani, 1975), or even a negative relationship (Kenis, 1979),
between the two factors. The other research conducted by Sardjito and Muthaher
(2007) showed that budget participation had direct effect on managerial
performance which there is positive relationship between budgetary participation
and manager performance in local government.
These mixed results indicate that no simple relationship exists between
budgetary participation and job performance, and suggest that there could be other
variables involved. Such inconsistent findings have prompted several researchers
to examine the antecedent variables that affect job performance indirectly during
budgetary participation. However, study of public-sector organizations remains
scanty. It is therefore necessary to extend the study of the complex relationship
between budgetary participation and performance to include an examination of the
commit to user
developing appropriate accounting-based planning and control systems that
facilitate effective budgetary development (Yuen 2007).
Shields and Shields (1998) have suggested that it is important not only to
understand the consequences of participative budgeting, but also to investigate its
antecedents. The current study has selected two factors as potential antecedent
variables: (1) need for achievement; and (2) work attitudes. However, previous
studies of budgeting and performance (Milani 1975; Steers 1975; Alam and Mia
2006) have identified job attitude among employees and need for achievement can
be represent as variables in the job performance.
According to Yuen (2007) who conducted the research about the
antecedent of budgetary participation in the context of public sector organization
in Macau, found that the two antecedent factors - a need for achievement and
work attitude - have a significant positive relationship with budgetary
participation, and concluded that indirect relationship exist between those two
antecedent factors and the dependent variable (job performance) with budgetary
participation as an intervening variable. From those result, this study wants to
adapt that research in public sector organization especially in the budgeting
process in Local Government’s Surakarta. As the recent public sector reforms
have also included a move towards decentralization to improve efficiency and
performance therefore budgetary processes in the local government have been
more participative. Since the autonomy regulation declared in 1999 and revised by
Law No.32/2004, each local government should be more independence including
commit to user
Government Budget (Anggaran Pendapatan dan Belanja Daerah/APBD) comes
into arrangement relied on performance approach, where each institution unit
(SKPD) should be involved in budgeting process. It explicitly in Minister of
Domestic Affair’s Regulation No.16/2006 which mandated that every SKPD must
arrange work program and budget (Rencana Kerja dan Anggaran/RKA).
This research examined the two antecedents factors (a need for
achievement and a work attitude) of participation in local government budgetary
activities and then to assess the impact of these two variables on job performance
in the context of managerial performance. So this research investigated budgetary
participation as intervening variable in the relation between the two antecedents
(need for achievement and work attitude) and managerial performance.
B.
PROBLEM STATEMENTS
The results from previous studies showed the relationship between
budgetary participation and job performance might be different under various
working conditions. As a result, the impact of budgetary participation on
performance in public sector also might be different from private sector, because
it has different working conditions. In addition, as governmental units, local
government is more hierarchical, bureaucratic and structured according to a
formal system of authority than privat sectors (Jermias and Setiawan 2007). Based
on the introduction explained previously, the research the problem statement can
be derived as follows: how are the relationship between need for achievement and
work attitude with the budgetary participation; and then through the budgetary
participation, how is the impact of these two variables on job performance in the
commit to user
C.
RESEARCH PURPOSE
According to the research problems, the purposes of this research are:
1. To examine the relationship between an employees’ need for achievement
and budgetary participation.
2. To examine the relationship between an employees’ work attitude and
budgetary participation.
3. To examine the relationship between budgetary participation and
employees’ job performance in local government as a public sector
organization.
D.
RESEARCH BENEFITS
The result of this research to be expected can give input, benefit for Local
government, about budgetary participation from each unit managers, and know
the influence of that participation in regional budget arrangement to performance.
And also show how is the antecedents’ factors such as positive job attitude and a
need for achievement influence the budgetary participation and then to assess the
impact of these two variables on job performance of local government officials as
budget actor according Law number 32/2004 about local government and Minister
of Domestic Affair’s Regulation No. 13/2006. The research result hopefully can
give contribution to academician to the development of public sector accountancy
literature especially in management accounting system development in public
commit to user
CHAPTER II
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
A. Literature Review
1. Budgeting Process in Local Government
Budget is a tool of accountability, management and economic policy. As
an instrument of economic policy, the budget function is created growth and
economic stability, also for even distribution of income, in order to achieve
government goals (Law No.17/2004). Local government budget (APBD) which
presented yearly by executive, give the detail information for legislative and
society about what programs that government planned to improve the quality of
life of the people, and how those programs will be funded. According to
Mardiasmo (2005), budgeting arrangement process has four purposes, such as:
a. Help government to achieve the fiscal goal and improve coordination inter
section/units in government surroundings.
b. Help to create the efficiency and fairness in providing public goods and
public service trough the priority making.
c. To make possible for government to fulfill the expenditure priority.
d. Improve the government responsibility and transparency to legislative and
commit to user
The appearance of local government autonomy system, since the declared
of Law no.32/2004 about local government and also Law no. 33/2004 about
financial balancing between central government and local government, brought
the fundamental change in the governance government and financial relationship,
also important change in local budgeting management. Local government budget
(APBD) arranged based on performance approach, that is a budgeting system
which give priority to the effort for performance achievement or output of the
fund allocation that was planned (Government Regulation No.58 / 2005).
Based on performance approach, APBD was arranged relied on a certain
target that will be achieved in one budget year. Preparing the local government
budget draft (RAPBD), local government and legislative (DPRD) arrange the
general policy of local government budget (APBD), which included guidance and
general determinations that will be agreed as guideline for local government
budget arrangement. The arrangement of general policy of APBD constitute the
effort for the achievement of vision, mission, goal, and target were determined in
Local government middle term development planning (Rencana Pembangunan
Jangka Menengah Daerah/RPJMD) for 5 (five) year period, and mayor program
which is arranged based on local government long term development planning
(Rencana pembangunan Jangka Panjang Daerah/RPJPD) that consider with the
national middle term development planning (Rencana Pembangunan Jangka
commit to user
In addition, based on Minister of Domestic Affair’s Regulation
No.13/2006 about the standard of local government budget management, for local
government budgeting (APBD) arrangement, after there is agreement (MoU)
about general policy of budgeting (KUA PPAS) between the chief of local
government and legislative, every institution unit (SKPD) of local government
will arrange program planning and budget of institution unit (RKA-SKPD) with
use local government middle term expenditure frame-approach, harmony
budgeting, and performance-based budgeting. RKA-SKPD will be used by local
government budgeting team (Tim Anggaran Pemerintah Daerah/TAPD) as
material for arrange the local government budgeting draft (RAPBD). Finally,
RAPBD will be discussed together by TAPD and legislative budgeting team (Tim
Anggaran DPRD/Badan Anggaran DPRD), and after evaluated by governor,
those RAPBD will be established as APBD. The cycle of Local Government
commit to user
Figure 1
Local Government Budgeting Arrangement Cycle
(source: Kawedar, Rohman & Handayani 2008)
2. Budgetary participation
Budgetary participation refers to the extent to which manager participate in
preparing the budget and influence the budget goals of their responsibility center
(Kennis 1979). According to Brownell (1986), budgetary participation is defined
as a process whereby subordinates are given an opportunity to get involved in and
have influence on the budget setting process. Budgetary participation also can be
commit to user
refers to the budget process planning in which managers who are involved to
decision making from the information exchange in their organization (Shields and
Shields, 1998).
Participative budgeting gives an opportunity for managers to involve in
budget arrangement. Generally, the whole of budget goals should be
communicated to managers who will help to expand the budget to fulfill the goal.
In budget arrangement, programs were translated by manager responsibility in
conducting the program or part of the program. Basically, budget arrangement is a
decision process of the role of each manager in conducting the programs.
Budgetary participation in public sector occurred when among legislative,
executive, and society cooperate in budget formulation process. Budget made by
Chief of local government which the proposal come from institution units that
made by manager unit. Those, each institution unit of local government should be
involved in budgeting process. It means more employees have allowed
participating in budgetary activities.
Many authors have suggested that participation in setting budgetary goals
encourages managers to identify with the goals, accept them more fully and work
toward their achievement. It is argued that budgetary participation provides an
avenue for subordinates to communicate their private information to
organizational decision-makers and the opportunity to obtain job-relevant
commit to user
The degree of budget participation developed by Milani (1975) can be
measured from the 6 (six) perception of:
a. The portion of the budget the employee involved in setting;
b. The kind of reasoning provided to the employee by a superior when the
budget is revised;
c. The frequency of budget-related discussions initiated by the employee;
d. The amount of the influence the employee felt he has on the final budget;
e. The important of the employee’s contribution to the budget; and
f. The frequency of budget-related discussions initiated by the employee’s
superior when budget are being set.
Sord and Welsch in Sardjito and Muthaher (2007) suggests that the higher
participation would result higher good morality and initiative. Participation in
budgeting activities showed a positive significant influence to employees’
attitude, improve the production quantity and quality, and also improve the
coordination among managers.
While the issue of whether higher levels of budgetary participation
enhance managers’ performance has been widely studied in the accounting
literature, empirical findings to date have proved to be mixed (Wentzel 2002).
Some studies found that budgetary participation is related to job performance and
the relationship is positive (Nouri and Parker 1998; Yuen 2007). Some studies
link the intervening variables such as motivation (Brownell and McInnes, 1986),
budget adequacy and organizational commitment (Nouri and Parker, 1998) and
commit to user
and Muthaher 2007), managerial attitude and motivation (Mia 1988). The results
showed both a positive and negative relationship between budgetary participation
and job performance. Such inconsistent findings have prompted several
researchers to examine the antecedent variables that affect job performance
indirectly during budgetary participation (Yuen 2007). In this research will
examine the need for achievement and work attitude as antecedent factors of
budgetary participation.
3. Need for achievement
It may be stated that need theory as the theory of motivation that addresses
what people need or require to live a life of fulfilment, particularly with regard to
work. Need theory has a long-standing tradition is motivation research. There are
various need theories of motivation. One of the most widely mentioned theories of
motivation is the Hierarchy of Needs Theory put forward by psychologist
Abraham Maslow. Maslow views human motivation in terms of a hierarchy of
five needs, ranging from the most basic physiological needs to the highest needs
for self-actualization. According to Maslow, individuals will be motivated to fulfil
whichever need is the most powerful for them at a given time. Starting with the
physical needs, which are the most basic, each need must be satisfied before the
individual desires to satisfy a need at the next higher level. It is in the following
hierarchy of importance according to immediacy that Maslow places human
needs:
(a) Physiological needs: These are the basic needs for sustaining human life
commit to user
basic as needs that people will be motivated to fulfill them first through
whatever behavior achieves this end.
(b) Safety or security needs: They consist of the need for clothing, shelter,
and an environment with a predictable pattern such as job security,
pension, insurance etc. People are motivated to fulfill these needs only
when the physiological needs are mostly satisfied.
(c) Affiliation, acceptance, love or social needs: Since people are social
beings, they need to belong, to be accepted and loved by others.
(d) Esteem needs: They include the need for power, prestige, status,
achievement, and recognition from others. Satisfaction of the self-esteem
need leads to feelings of self-confidence, worth, capability, and adequacy,
of being useful and necessary in the world.
(e) Need for self-actualization: Maslow regards this as the highest need in his
hierarchy. This is the concept of fulfilling one’s potential and becoming
everything that one is capable of becoming.
Need for Achievement as the part of esteem needs can be referred as an
individual's desire for significant accomplishment, mastering of skills, control, or
high standards. People high in need for achievement are characterized by a
tendency to seek challenges and a high degree of independence. Their most
satisfying reward is the recognition of their achievements. Sources of high need
for achievement include:
a) Parents who encouraged independence in childhood;
commit to user
c) Association of achievement with positive feelings;
d) Association of achievement with one's own competence and effort,
not luck;
e) A desire to be effective or challenged;
f) Intrapersonal Strength. (www.wikipedia.com)
A need for achievement also can be defined as the personal striving of
individuals to attain goals within their social environment (Cassidy and Lynn
1989). The need for achievement is the employees' desire to perform to high
standards and to excel in their job. Individuals with a high need for achievement
like to set their own personal goals and are opposed to the organization setting
goals. These individuals also like goals in which they have a fifty percent chance
of achieving, because they do not want goals that are too easy to achieve.
Individuals with a high need for achievement want frequent, specific feedback and
to know how well they are performing their job. Individuals with a high need for
achievement also want to be in control of their workplace and work environment
and to be responsible for their productivity (Rayburn, Hammond, and Overby
2004). Individuals high in achievement needs have been characterized as
‘realistic’ and generally have occupational goals that are congruent with their
abilities. They are also found to be flexible in seeking detailed information and
feedback from a variety of sources to help in their pursuit of excellence
(Subramaniam 2002).
Persons with a high need for achievement are potentially useful members
commit to user
independent, and have an interest in excellence. They are also willing to take
personal responsibility for success and generally perceive themselves to have a
higher ability than the others (Yuen 2007).
According to Choi (2006), a high need for achievement is characterized by
the following:
1) a high interest in tasks which require a considerable level of skill and
problem solving ability,
2) a tendency to set moderately difficult goals,
3) a preference for concrete and quantitative feedback, and
4) a pursuit of satisfaction which is derived from the task itself and task
performance.
The need for achievement is an unconscious motive that drives individuals
to perform well or to improve their performance. Individuals with a high need for
achievement have a propensity to demonstrate their ability in overcoming difficult
tasks while maintaining consistently high standards. Such individuals consistently
seek feedback on their performance in order to learn from their mistakes and
prefer quantitative feedback. One reason why individuals with a high need for
achievement seek objective feedback is that their motivation is intrinsic more so
than extrinsic and therefore they prefer objective appraisal rather than approval or
acceptance based on the subjective appraisals of others (Loon and Casimir 2008).
According to Steers (1975) a high need for achievement subjects will tend
to place a higher valence on the attainment of their performance objectives than
commit to user
achievement- oriented behavior. Thus, when the tasks are of a challenging nature,
he argued that high need for achievement subjects will manifest high expectations
of task accomplishment and will exhibit a high level of effort and concomitant
involvement in their work. He found that individuals with strong higher order
needs demonstrate higher performance than individuals with weaker higher order
needs.
4. Work attitudes
Attitude is an important variable in human behavior. For better
understanding, it is important to discuss the meaning and definition of attitude.
There are six salient features, which contribute to the meaning of attitude
(Aswathappa in Jegadeesan 2007) such the followings:
a. attitudes refer to feelings and beliefs of individuals or group of
individuals;
b. the feelings and beliefs are directed towards other people, objects or ideas;
c. they tend to result in behavior or action;
d. they can fall anywhere along a continuum from very favorable to very
unfavorable;
e. they endure;
f. all people, irrespective of their status or intelligence, hold attitudes.
Individuals acquire attitudes from several sources but the point to be
stressed is that the attitudes are acquired but not inherited. The most important
sources of acquiring attitudes are direct experience with the object, association,
commit to user
Individuals possess hundreds of attitudes. But organizational behavior is
concerned with work-related attitudes, which are mainly three: job satisfaction,
job involvement and organizational commitment (Jegadeesan 2007).
Milani (1975) defined attitude in terms of employees’ feelings and
predispositions towards their jobs and employers in a budgetary context.
Following to Festinger’s theory of cognitive dissonance, it may argued employees
with positive work attitudes develop a cognitive dissonance (or psychological
uneasiness) during their participation in budget setting. To reduce this dissonance,
they try to improve their performance (Mia 1988; Yuen 2007).
Work attitude is important because committed executives are expected to
exemplify a willingness to work harder to achieve organizational goals.
Executives demonstrating this commitment have a greater desire to remain
employed with that organization. (Pool and Brian Pool 2007).
Milani (1975) divided working attitudes into job attitudes and organization
attitudes. He found that positive attitudes towards a job enhance an employee’s
identification with the organization’s goals, thus leading to an effective overall
performance for the organization. In most instances, attitudes towards the job have
been offered as an intervening factor that affects job performance when
participating in budget activities. Job related attitudes also play a major role in
shaping the work behaviors of managers in organizations (Jayan 2006).
Lynn in Jayan (2006) have developed a theoretical model to describe the
commit to user
and satisfaction) and Job attitudes (Job involvement and satisfaction) have with
several behavior intentions (turnover, absenteeism and performance).
The work attitudes investigated in this study included job satisfaction and
organizational commitment. In this present study, work attitude is related to job
satisfaction as attitude toward job and affective commitment as attitude toward
organization (Muse and Stamper 2007; Larson and Luthans 2006).
4.1. Job satisfaction as attitude toward job
This study used the global approach over the dimensions approach,
conceptualizing job satisfaction as the degree of positive emotions an employee
has toward a job. According to Shahnawaz and Jafri (2009) job satisfaction has
been defined as a pleasurable emotional state resulting from the appraisal of one’s
job - an affective reaction to one’s job and an attitude towards one’s job. Job
satisfaction also can be refers to one’s feelings towards one’s job. It can only be
inferred but not seen. Positive attitudes towards the job are conceptually
equivalent to job satisfaction and negative attitudes towards the job indicate job
dissatisfaction. If any employee likes his job intensely he will experience high job
satisfaction. If he dislikes his job intensely, he will experience job dissatisfaction
(Jegadeesan 2007).
The job satisfaction measurement that has been used for public sector
organization in previous study conducted by Baptiste (2008), focuses on
employees being satisfied with eight categories of their job: (1) sense of
commit to user
security, (6) training received, (7) the work they do, (8) involvement in decision
making.
4.2. Affective commitment as attitude toward organization
Organizational commitment reflects the extent an individual identifies
with an organization and committed to its organizational goals. (Pool and Brian
Pool 2007). Whereas satisfaction means positive emotions toward a particular job,
organizational commitment is the degree to which an employee feels loyalty to a
particular organization (Elanain 2009). Similar to previous study about
organizational commitment (Muse and Stamper 2007; Larson and Luthans 2006;
Elanain 2009) study, this research conceptualized organizational commitment as
an affective form of commitment based on feelings of loyalty toward the
organization (Allen and Meyer, 1990; 1991).
Affective (or attitudinal) commitment is defined as the willingness to
execute continuous effort for the success of the organization. It is characterized by
a strong belief in, and acceptance of, the organization’s goals and values (Yahya
et al 2008). As noted Parker and Kyj (2006), affective commitment is
characterized by: (1) strong belief in the goals and values of the organization, (2)
willingness to exert considerable effort to help the organization to reach its goals,
and (3) strong desire to maintain organizational membership. For individuals who
are committed to their organization, the desire to achieve organizational goals
extends beyond personal interests in acquiring tangible organizational rewards
commit to user
the organization even if direct reward is not contingent upon that aid. Committed
employees identify with organizational success (Parker and Kyj 2006).
5. Employees’ job performance
Job performance is a commonly used, yet poorly defined concept in
industrial and organizational psychology, the branch of psychology that deals with
the workplace. It most commonly refers to whether a person performs their job
well (www.wikipedia.com). Job performance is the degree of how an individual
manager perceives the resources to fulfill and support job requirement. The job
requirement some concerns the budget process to show the managers' decision
making to archived their job performance and job outcome (Agbejule and
Saarikoski 2006). In this study the employees’ job performance refers to the
managerial performance. It means job performance is the competences of
employees in conducting the managerial activity include planning, investigating,
coordinating, evaluating, supervising, staffing, negotiating and representing.
Effective managerial performance may be regarded as depending on competence
in the areas of managerial activity.
There are some indicators develop by Mahoney at all (1963) to measure
the managerial performance such as the followings (Frucot and White 2006;
Parker and Kyj 2006):
a. Planning
Determining goals, policies, and courses of action (e.g., work
commit to user b. Investigating
Collecting and preparing information for records, reports and accounts
(e.g., measuring output, record keeping, job analysis).
c. Coordinating
Exchanging information with people in other organizational units in
order to relate and adjust programs (e.g., advising other departments,
liaison with other managers, arranging meeting).
d. Evaluating
Assessment and appraisal of proposals or of reported or observed
performance (e.g., employee appraisals, judging output records,
judging financial reports, product inspection).
e. Supervising
Directing, leading and developing the subordinates (e.g., counseling,
training and explaining work rules to subordinates; assigning work and
handling complaints).
f. Staffing
Maintaining the work force of institution units (e.g., recruiting,
interviewing and selecting new employees; placing, promoting and
transferring employees).
g. Negotiating
Purchasing, selling or contracting for goods or services (e.g.,
contracting suppliers, dealing with sales representatives, collective
commit to user h. Representing
Advancing the general interest of the organization through speeches,
consultation, or contact with others outside the organization.
i. Overall Performance
Evaluation of the overall performance.
6. Need for achievement, work attitude and job performance
Some previous studies of organizational dynamics have identified positive
attitudes among employees and a need for achievement as being important
elements in lowering turnover and improving performance (Yuen 2007). Need for
achievement has long been recognized to influence job performance. A sense of
achievements promote good job performance. Better performance results from
employees’ passion for achievement (Alam and Mia 2006). Individuals with a
high need for achievement want frequent, specific feedback and to know how well
they are performing their job (Rayburn, Hammond, and Overby 2004).
They are also willing to take personal responsibility for success and
generally perceive themselves to have a higher ability than the others (Kukla,
1972). Klich and Feldman (1992) found that such managers care about their work,
and put more effort into it. This desire for success increases their feeling of
self-worth in an organization. These employees require more accurate feedback and
information from their superior to achieve a preset target.
As the need for achievement, work attitude also were examined by some
commit to user
Such as Milani (1975) suggested that attitude toward the job is offered as an
intervening factor which lead to better performance. He also suggested that good
attitude toward company or organization will lead a more effective overall
performance for the organization. Mia (1988) found that manager’s attitude
appear to be a contingent variable moderating the relationship between their
budget participation and performance. The result revealed that budget
participation by managers who had a more favorable attitude was associated with
improved performance while that budget participation by managers who had a less
favorable attitude was associated with hampered performance. In addition, Yuen
(2007) found that employees’ work attitudes and their need for a sense of
achievement are confirmed as significant influencing factors to job performance
during participation in budgetary activities. The present study examined the need
for achievement and work attitude as the antecedent of budgetary participation in
order to enhance job performance.
B. Hypothesis Development
1. Need for achievement and budgetary participation
A need for achievement has long been thought to influence job
performance. Locke in Alam and Mia (2006) suggested that a sense of
achievement promotes motivation and good job performance. The importance of a
sense of achievement lies in the belief that one should work hard to accomplish
commit to user
In terms of the budgeting process, these findings suggest that managers
with a greater need for achievement are likely to set more challenging, but
attainable, budget targets. They are also likely to seek greater control over their
working environment to maximize the probabilities of achieving or attaining their
goals, and the budgetary participation facilitates achievement such control. They
are more likely to express a willingness to accept more challenges and to take
extra responsibilities voluntarily (Yuen 2007). Given that budget participation is
an important organizational process through which managers may exchange
job-relevant information, it is possible that managers’ need for achievement may
affect their desire for participation in budget setting. The need for achievement
acts as a motivating factor for employees to participate in budget setting as it
facilitates their performance improvement (Alam and Mia 2006).
Steers (1975) also found that need for achievement does have an important
effect on the relationship between performance and job attitudes. Findings
concerning need for achievement are consistent with the argument advanced
earlier that high need for achievement subjects would exhibit a relatively strong
association between performance and satisfaction because superior performance
in itself often represents a form of intrinsic reward for such persons and often
leads to the receipt of positively extrinsic rewards from the organization.
Subramaniam (2002) stated that increasing participation in the budgetary
process becomes useful for managers with high need for achievement because
participation helps them gain appropriate job-relevant information and set more
commit to user
managers with high need for achievement would seek to have greater control over
their work environment in order to maximize the probability of achieving or
attaining their goals, and budgetary participation facilitates achieving such
control. So, it suggest that managers’ need for achievement may lead to (or act as
an antecedent of) their budget participation, which in turn may positively
influence their performance. As results of the above discussion, Hypothesis (H1)
can be stated as follows:
H1 : There is a direct and positive association between an employee’s need
for achievement and employee’s budgetary participation.
2. Work attitudes and budgetary participation
According to Muse and Stamper (2007), work attitude like job satisfaction
and affective commitment represent affective states or feelings employees may
have toward their job and work organization. In evaluating the effectiveness of
budgetary participation, researchers have commonly treated the construct of
“attitude” as an outcome variable. This is because it is commonly assumed that
participation should positively affect attitude as an outcome phenomenon.
However, improved budgetary participation can also be a result of positive work
attitudes among employees. Conversely, employees with negative work attitudes
might not care about achieving their budgeting goals during budgetary
participation (Yuen 2007).
An important reason for examining this variable in the present study is the
commit to user
effective overall performance through participative budgeting. The relationship
between budget participation and work attitudes (job satisfaction and affective
commitment) should therefore be tested. The research conducted by Yuen (2007)
reported that managers with a positive attitude are more likely to willing to
participate in budgetary activities. H2 can thus be formulated as follows:
H2 : There is a direct and positive association between an employee’s work
attitude and employee’s budgetary participation.
3. Budgetary participation and employees’ job performance
Budgetary participation should relate to the involvement of managers in
the budgetary process and their influence over the setting of budget targets
(Shields and Young 1993). The argument that managers’ participation in a budget
setting affects job performance is based on two arguments.
Firstly, psychological theory suggests that participation is related to
performance through self-identification and ego-involvement with budget goals.
Secondly, participation is seen to improve the flow of information between
subordinates and superiors, thus leading to improved cognition and enhanced
decision-making (Shields and Young, 1993). As a result, participation can
promote better performance through facilitation of learning and knowledge
acquisition.
The present study thus proposes that managers with a high need for
achievement and positive job attitudes are likely to seek greater control over their
commit to user
them with such control. The previous research result conducted by Yuen (2007)
found that there is a significant positive relationship between budgetary
participation and job performance. So, H3 is therefore postulated as follows:
H3 : There is a direct and positive association between an employee’s
budgetary participation and employee’s job performance.
C. Conceptual Schema
Two variables were selected for examination in the present study as possible
antecedent variables of participative budgeting:
(1) managers’ need for achievement; and
(2) manager’s work attitudes.
These variables were chosen for examination because employees who have a need
for achievement and those who have a positive work attitude are likely to
demonstrate enhanced budgetary participation. Such employees are likely to
develop greater identification with, and involvement in, the organization. In turn,
their job performance is likely to be enhanced. These propositions, as shown in
commit to user H2
H3
H1
Figure 2 Conceptual schema
This research consider only the indirect relationship between the two
antecedent variables (need for achievement and work attitude) and the dependent
variable (job performance), which budgetary participation is taken as the
intervening variable in this indirect relationships. No hypothesis is developed for
the direct relationship between those two antecedent variables and job
performance.
Budgetary
Participation Job Performance
commit to user
CHAPTER III RESEARCH METHOD
A. Research Design
This research is quantitative study, and its type is a hypothesis testing.
Sekaran (2003) states that studies engage in hypothesis testing usually explain the
nature of certain relationships, or establish the differences among groups or the
independence of two or more factors in a situation.
B. Population, Sample, and Sampling Technique
Population refers to the entire group of people, events, or things of interest
that the researcher wishes to investigate (Sekaran 2003). The population in this
research is the employees who participate in the budget setting process of local
government Surakarta. In the process of local government budget setting,
participation from each of institution units (Satuan Kerja Perangkat Daerah
/SKPD) are needed, because they should be arranged the budget program planning
(Rencana Kegiatan Anggaran/RKA) for their units. Here, researcher chose the
managers of institution units (SKPD) of local government of Surakarta that
participate in the budget setting process of local government Surakarta, who has
commit to user
C. Data Collection
This research used survey method. The data obtained by listing question (questionnaire). The questionnaire spread directly (questionnaire was sent directly
to the respondent) for the each manager of institution units (Satuan Kerja
Perangkat Daerah/SKPD) as decision maker (Pengguna Anggaran/Kuasa Pengguna Anggaran) who responsible about the budget of their own institution.
According to Local Government of Surakarta’s Regulation No.8 /2008
about Local Goverment Organizing and Managing Section (Susunan Organisasi
dan Tata Kerja Perangkat Daerah), the amount of institution units (SKPD) are such the following:
Table 1
The amount of SKPD in Local Government of Surakarta
NO
SKPD
AMOUNT
1 Bagian 9
2 Sekretariat DPRD 1
3 Dinas 15
4 Inspektorat 1
5 Badan 4
6 Kantor 6
7 Kecamatan 5
8 Kelurahan 51
AMOUNT 92
commit to user
D. Variables and Operational Definition
1. Independent variables
An independent variable according to Sekaran (2003) is one of the variables
that influence the dependent variable in either a positive or negative way. In
this research the indenpendent variables are:
a. Need for achievement
Need for achievement is the personal striving and employees' desire to
perform to high standards and to excel in their job. The present study
adopted the Manifest Needs Questionnaire to confirm that the
measurement was appropriate for assessing the need for achievement. A
modified five-item version of Steers and Braunstein’s (1976) Manifest
Needs Questionnaire was used to measure need for achievement. This
instrument has previously been used by Subramaniam et al. (2002).
Respondents were required to respond on a seven-point Likert-type
scale.
b. Work attitude
Work attitude is refers to the manager’s attitudes toward job and toward
their organization. In this study the work attitude measured by job
satisfaction and affective commitment. Job satisfaction was measured
by eight-item instrument developed by Nicole Renee Baptiste (2008).
The job satisfaction measurement has been used for public sector
organization that focuses on employees being satisfied with eight
commit to user
initiative, (3) influence over job, (4) pay, (5) job security, (6) training
received, (7) the work they do, (8) involvement in decision making.
Affective commitment was measured by eight-item instrument,
developed by Meyer and Allen (1991). This instrument has previously
been used by many studies (Ketchand and Strawser 1998; Muse and
Stamper 2007). Respondents were required to respond on a seven-point
Likert-type scale. The overall attitude (towards the job and towards the
organization) was assessed by the sum of the scores.
2. Intervening variable
The intervening variable surfaces as a function of the independent
variable operating in any situation, and helps to conceptualize and explain the
influence of the independent variable on the dependent variable (Sekaran
2003). The intervening variable in this research is budgetary participation.
Budgetary participation is the extent to which the employees or managers in
an organization have the opportunity to get involved in formulation of
budgets for which the employees are responsible to implement.
The Milani (1975) six-item, seven-point Likert-type scale instrument
was used to assess participation in budgeting. The instrument has been
extensively used in earlier studies and has provided high internal reliability
(Brownell, 1986; Frucot and White, 2006; Subramaniam et al 2002;Yuen
2007). Participants were asked to respond to each item on a seven-point scale
ranging from 1 (representing low participation) to 7 (representing high
commit to user 3. Dependent variable
The dependent variable in this research is job performance. Job
Performance is the competence of employees in conducting the managerial
activity includes planning, investigating, coordinating, evaluating,
supervising, staffing, negotiating and representing.
Job performance was measured with a self-evaluation questionnaire
developed by Mahoney et al. (1963). Respondents were asked to respond on a
nine-point Likert-type scale. They were required to rate their performance on
eight dimensions – planning, investigating, coordinating, evaluating,
supervising, staffing, negotiating and representing. They were also asked to
rate their overall performance. Although such self-evaluation might be
criticized as being a subjective measure, similar techniques have been widely
adopted in many studies (Brownell and Hirst 1986; Frucot at all 2006;Yuen
2007; Sardjito and Muthaher 2007).
E. Analysis Technique
The data analysis in this research conducted: descriptive statistic, validity and
reliability test and hypothesis testing. The computation of analysis technique is
commit to user 1. Descriptive statistic
Descriptive statistic consists of the measurement of mean, median,
standard deviation, maximum, and minimum value from each data sample. This
analysis means to give the picture of concerning distribution and the data sample
behavior.
2. Validity and reliability test
Research variable measurement using questionnaire instrument must
use quality examination of data to obtain the test of validity and reliability. This
examination aims to know whether the instrument used is valid and reliable or
not. This is done since the truth of data analysis assesses the quality of research
result.
The aim of validity test is to measure the quality of instrument used and
to show the level of validity of the instrument, and also how well a concept can be
defined by a size of measurement (Ghozali 2006). Instrument can be categorized
as valid if instrument can measure what the researcher want and show the accurate
data. Examination conducted by using factor analysis. This research used
Confirmatory Factor Analysis (CFA) test to measure validity test. Confirmatory
Factor Analysis (CFA) test used to test whether the construct have
unidimentionality or the indicators can confirm the construct or variable. Data is
able to be conducted by factor analysis if the Kaiser’s MSA is above 0.5 (Ghozali
commit to user
Reliability test conducted by calculating Cronbach Alpha (ά) to test the
eligibility to consistency of all used scale. Instrument told reliable if owning
Cronbach Alpha (ά) more than 0.60 this is based on the Nunnally criteria (Ghozali
2006).
3. Hypotheses testing
Hypothesis will be tested by path model for the data analysis. Path
coefficients (representing the relationships between variables) were estimated by
standardizing the β regression coefficients (Yuen 2007). The relationship between
the variables in the path model can be stated as two equations, such as the follows:
BP = P31NA + P32 WA+ P3aRi... (1)
Where, BP : is the participative budgeting,
NA : the need for achievement,
WA : the work attitude,
P : the standardized partial regression coefficients (path coefficients),
Ri : the standardized residual
JP = P41NA + P42 WA+ P43 BP+P4bRi... (2)
Where, JP : is the job performance,
NA : the need for achievement,
WA : the work attitude,
BP : the participation in budgeting.
P : the standardized partial regression coefficients (path coefficients),
commit to user
Before the multiple regression test, the examination must use classical
assumption test to ensure the validity of research data, not bias, consistent, and
further it can estimate the efficient regression coefficient (Sekaran 2003).
a. Multicollinierity test
The goal of multicollinierity test is to test whether the regression
model found the correlation between the independent variables. The good
regression model must not have correlation between the independent
variables. If the independent variables have correlation, so the variables
are not orthogonal. To detect the multicollinierity, this research used the
tolerance value and the VIF (Variance Inflation Factors) value. To confirm
that multicollinierity not exist in the regression model, if the Tolerance
value is above 0.10 and the value of VIF is < 10 (Ghozali 2006).
b. Heteroskedasticity test
The goal of heteroskedasticity test is to test whether in the
regression model there is inequality variance from residual of the certain
research to another. If there is fix variance of residual of the certain
research to another, it called homoskedasticity. The good regression model
is if there is homoskedasticity. If the graph scartterplots result show that
dot disseminate at random and also spread over on above and also under
number 0 (zero) at axis of the ordinate, this matter inferential that the
commit to user c. Normality test
The goal of Normality test is to test whether the regression model,
disturbing variable or residual normally distributed. Researcher uses the
analysis of statistic One-Sample Kolmogorov-Sminorv test with the
significant level 0.05, thus the data of residual is normally distributed. If
the Histogram and Normal P-P Plot of Regression Standardized Residual
shows that histogram graphic gives the normal pattern distribution and the
normal plot graphic shows that the dot spread around the diagonal line and
follow the diagonal line. It means that the histogram graphic show the
normal plot distribution thus the regression model is fulfill the normality
