Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.12.2.2021.006
© IAEME Publication Scopus Indexed
EFFECT OF BUDGET EMPHASIS AND BUDGETING PARTICIPATION AGAINST
MANAGERIAL PERFORMANCE IN HOSPITALITY SERVICES COMPANIES
Muhammad Natsir, Muhammad Darma Halwi, Masruddin, Betty*, Hamsun Faculty of Economic, Tadulako University, City Palu, Indonesia
*Corresponding Author ABSTRACT
Purpose: This study aims to determine the effect of budget emphasis and participation in budgeting on managerial performance in hospitality and lodging service companies in the Parigi Moutong Regency.
Method: It is a survey research using total sampling/saturated sampling as the technique of sampling. There were 33 respondents, consisted of managers or owners who were involved in the budgeting process. The study is a quantitative research using multiple linear regression data analysis.
Result: Budget emphasis and participation in budgeting have a significant effect on managerial performance, simultaneously. The budget emphasis significantly affects the managerial performance, and budgeting participation contributes a partial impact on managerial performance. The results of the budget emphasis and participation in
budgeting can be used as a foundation in compiling a good budget program for hospitality service companies in Parigi Moutong District. Hotel services companies should instill corporate values to managers/owners to improve company performance.
Conclusions: Participation in budgeting has a partly significant effect on the managers' performance in hospitality service companies in Parigi Moutong Regency.
Key words: budget emphasis, budgeting participation, managerial performance participation.
Cite this Article: Muhammad Natsir, Muhammad Darma Halwi, Masruddin, Betty and Hamsun, Effect of Budget Emphasis and Budgeting Participation Against Managerial Performance in Hospitality Services Companies, International Journal of Management (IJM), 12(2), 2021, pp 62-68.
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1. INTRODUCTION
Hotel is a privately run building that provides the general public with accommodation, including visitors with facilities such as hotel services, food and drink, merchandise, clothing washing and the use of furniture and decoration found in it (Sri, 1996). In general, a hotel is a type of building, symbol or accommodation business which provides accommodation, food and drink service providers and other services where every service is intended for the general public,
either those who spend the night in the hotel or who use only those services operated by commercially regulated hotels, provide and provide services through marketing.
The first element relates to the budgeting process and the second component to how people in the company react to the budget structure, the use of the budget to execute the control system, and the performance assessment. It also refers to improving communication and coordination, which means that budgeting is a human activity and thus budgeting has many different dimensions of conduct. The success or failure of the budget depends on how management considers the consequences for employee behavior (Raghunandan et al., 2012).
Some researchers have observed the relationship between budget and managerial (financial and non-financial) efficiency. A research study on the relationship between budget emphasis
and accounting performance measurement as an assessment instrument for cost center
managers, have shown a negative relationship with management performance (Hopwood, 1972). Budget emphasis is defined as the condition of the company that places the budget as one of the most dominant factors in measuring the performance of subordinates (Veronica &
Krisnadewi, 2009). Budget emphasis is also known as granting rewards or performance appraisals for middle and lower managers according to the achievement of budget targets (Dewi
& Erawati, 2014). Budgetary pressures are one of the main factors causing the gaps in the budget (Slack Budget)(Henttu-Aho, 2018). This data occurs because the budget is the only tool in assessing management performance. Performance appraisals are only based on achieving targets, so everyone will try to improve the prospect of compensation by creating gaps (Suartana, 2010). The budget preparation process is an activity involving several parties, both senior managers and lower-level managers, each of which plays an essential role in preparing and evaluating several budget alternatives and targets. The resulting budget is always used as a benchmark for managers' and employees ' performance (Leslie, 1992). Participatory budgeting is therefore intended to increase the efficiency of managers, if the target has been specified and participation decided, employees would internalize the goals and be responsible to achieve them as they engage in the planning of the budget.
Participation in higher budgeting can improve managerial performance, but the relationship of budgeting participation toward contingency factors (decentralized and leadership style) does not show a significant relationship (Nor, 2009). It identifies that a combination of participatory between participation and contingency factors (decentralization and leadership style) to managerial performance is the right suitability. Participatory budgeting is expected to improve
manager performance, that is when a goal is designed, and participation is agreed upon, employees will internalize predetermined goals and have a sense of personal responsibility to achieve them because they are involved in budgeting (Amir et al., 2020; Zahra et al., 2017;
Milani, 1975). Individual factors that affect the relationship between the budget and managerial performance may be concluded in general consisting of motivation, remuneration, budget-
targeted clarity, the level of difficulty of budget targets, commitment to the organization,
information relevant to work, attitudes, locus of control and cognitive style (Akhmad Syakhroza, 2002).
Hotels operating in the district of Parigi Moutong are currently drawing up budgets and emphasizing on a fiscal year. A total of 33 hotels are listed, and are I, II, and non-star hotels.
The type of budget prepared by the hotel manager consists of operating and financial budgets.
Data from the Office of Tourism and Creative Economy (2015) shows that most of the length of stay of foreign tourists (tourists) is in the range of 5-15 days. In 2014 the average length of stay of foreign tourists was 7.66 days, with the largest average amount of expenditure being IDR. 4,000,000/day/person. This means that for one tourist expends IDR. 30,640,000, if multiplied by the number of foreign tourists visiting Central Sulawesi in 2015 amounted to
17,940 people, the total foreign exchange in circulation in Central Sulawesi was IDR.
549,681,600. The accommodations used by foreign tourists mostly stay at Cottages 37.80%, Jasmine Hotels 29.80%, Star Hotels 16.40%, Lodging at 9.60%, and Family / Friends House ’ at 9.60% (Dinas Pariwisata dan Ekonomi Kreatif Sulawesi Tengah, 2015).
This study aims to determine the effect of budget emphasis and participation in budgeting on managerial performance in hospitality and lodging service companies in the Parigi Moutong Regency.
2. METHODS
This study explored the effect of budgetary focus and budgetary involvement on controlling efficiency at Parigi Moutong Regency s hospitality and accommodation services enterprises. ’ The target population in this study was managers who work in hospitality and lodging service companies in the Regency of Parigi Moutong. According to information obtained from the Office of Tourism and Creative Economy of Central Sulawesi Province in 2019, there were 33
hotels and inns. Sampling in this study was conducted using a non-probability sampling technique with a total sampling/saturated sampling technique.
The data needed to obtain the primary data would be collected by distributing questionnaires to hotel and hotel service managers that were considered to represent or as samples from existing hotel and lodging companies. The variables used in this study were the independent and dependent variables, to determine each operational definition and how to measure it as follows: Independent Variables Budget Emphasis (X1), Budgeting Participation Participation (X2), and Dependent Variables in Managerial Performance (Y) s.
3. RESULTS
Multiple linear regression was done to measure how much the influence of independent variables on the dependent variables. The multiple regression analysis in this study aims to look at the effect of budgetary arrangement participation and control on managerial performance.
The results of the multiple regression analysis in this study using a significant level of 5%.
Based on the results of the SPSS 24.0 windows test, the results of the regression analysis are shown in Table 1.
Table 1 Multiple Linear Regression Test Results
Model
Unstandardized
Coefficients Standardized Coefficients
T Sig.
B Std.
Error Beta
1 (Constant) 8.782 3.331 2.637 0.014
Budget
Emphasis -0.062 0.229 -0.071 -0.269 0.790
Budgeting
participation 0.702 0.256 0.728 2.743 0.011
The results of the multiple linear regression test were then entered into the model of the multiple linear regression equation with the following formulation:
The regression equation above gives an idea of the magnitude of the effect of the independent variable on the dependent variable. Wherefrom the coefficient X1 (participation in budgeting), X2 (control) where X1 is positive (+), and X2 is positive (+). A constant value was 8.782 and classified positive. This value indicated that the free variable emphasis on the budget (X1), and the preparation of the budget (X2) was considered constant or unchanged (zero value), then taxpayer compliance (Y) would be worth 8,782. The regression coefficient for budget emphasis (X1) was -0.062 and classified as negative (-). It means that every change of one unit in the stress emphasis variable with the assumption that the other variables were fixed,
then managerial performance changed by -0.062 in the opposite direction. The regression coefficient for budgeting (X2) was 0.702 and positive (+). It means that every change of one unit in the budgeting variable assuming the other variables were fixed, then managerial performance changed by 0.702 in the same direction
The determination coefficient (R square) effectively calculates how far changes in the dependent variable can be applied (Zahra, 2020). A low R square means that the capacity to describe the variation of the dependent variable is limited in independent variables. A close value means that almost all of the information needed to predict changes in the dependency variable is given by the independent variable. The correlation coefficient (Multiple R) and determination coefficient (R Square) are shown in the table 2.
Table 2 Coefficient of Determination
Model R R Square Adjusted R
Square Std. Error of the Estimate
1 0.669a 0.448 0.407 3.37860
a. Predictors: (Constant), Budgetting Participation, Budget Emphasize.
b. Dependent Variable: Managerial Performance
Following the Table 2 the coefficient (Multiple R) of 0.669 explains the relationship between the independent variables such as budget emphasis and Budgeting Participation on the dependent variable, such as Managerial Performance was about 66.90%.
Table 3 F Test Results (Simultaneous Test) ANOVAa
Model Sum of Squares Df Mean
Square F Sig.
1 Regression 249.960 2 124.980 10.949 0.000b
Residual 308.203 27 11.415
Total 558.163 29
a. Dependent Variable: Managerial Performance
b. Predictors: (Constant), budget emphasis, Budgeting Participation
Table 3 shows that the Fcount value of 10.949 with a significance value of 0.000. Fcount > Ftable
with the number of samples (n) = 30; number of independent variables (k) = 2; Significant rate α = 5%, so the Ftable value of 3.34 was obtained with the following equation: F table = F (k ; n- k) = F (2 ; 28) = 3,34
Y = a + b1X1 + b2X2 + e Y = 8.782 + (-0.062)X1 + 0.702X2 + e
Value of Fcount > Ftable (10.949 > 3.34), and the significance level was less than the rate of distrust (0.000 <0.05). Based on these results, it can be concluded that budget emphasis (X1)
and budgeting participation (X2) simultaneously had a significant effect on managerial performance (Y), so that the first hypothesis proposed can be accepted.
Table 4 Result of T-test (Partial)
Model T Sig.
1
(Constant) 2.637 0.014
Budgect Emphasize 3.508 0.001
Budgetting Participation 2.743 0.011 a. Dependent Variable: Managerial Performance
Based on Table 4 shows that the results of the T-test statistic calculation of the independent variables included in the regression model show that: 1) Partial test (t-test) on the Budget Emphasis variable on managerial performance shows that the tcount s 3.508> twa table was 1.703, and the significant value was 0.001 <0.05 (significant rate α = 5%). The effect was positive.
This indicates that partial Budget Emphasis influences managerial performance. 2) Partial test (t-test) on the Budgeting Participation variable on managerial performance shows that the tcount
was 2.743 > ttable was 1.703 and the significant value was 0.011 < 0.05 (significant rate α = 5%).
The resulting effect was positive. This indicates that partially Budgetary Participation has an influence on managerial performance.
4 DISCUSSIONS .
According to the test results toward the proposed hypothesis, it exhibits the budget emphasis variable has a significance level of 0.000. The p value <0.05 means that budget emphasis has a
significant and positive impact on budgeting participation in managerial performance.
Emphasis on budgets along with budgeting participation may improve the managerial performance(Otalor & Oti, 2017). The emphasis budget and budgeting process involving all members of the company such as, chairperson, treasurer, manager, and coordinator of this can affect the performance of companies managerial (Karsam, 2015). The process of budget emphasizing in hotel and lodging service companies already represents a good process. The budget emphasizing process involves all parties in the company so it is expected to achieve predetermined goals or targets and obtain better budget realization due to moral responsibility.
The variable of participation in budgeting has a significance level of 0.011. A P-value <0.05
means that budget participation has a significant and positive impacts on managerial performance. The budgeting process for hotel and lodging service companies has described the participatory budgeting process(Sujana, 2010). When the budget preparation process involves the chairperson, treasurer, manager, and coordinator of business units within the company, it is expected that this will achieve the targets previously set and obtain better budget realization because of moral responsibility. Budgeting participation has a significant and positive effect on managerial performance(Noor, 2012).
Interpersonal factors are developed in order to see whether the relationship between individuals will be able to influence the benefits of the budget in improving the managerial performance of the company. There are two factors that are often used in budget research, namely managerial roles, and leadership styles. At the same time, organizational factors lead to budget contribution in improving managerial performance because the company is affected by uncertainties in the company of uncertain environments, tasks, technology, and decentralization. Then for cultural factors/culture, such as the use of budget information is determined by the condition of culture, both corporate culture, national culture, professional culture, and hierarchical culture (tiered) (Ahmad Syakhroza, 2000). There was a positive and
significant relationship between participation in budgeting and managerial performance (Brownell & McInnes, 1986).
5 CONCLUSION .
Budget emphasis and budget participation have a significant simultaneous effect on the performance of managers in hospitality service companies in Parigi Moutong Regency. Budget
emphasis has a partially substantial impact on the performance of managers in hospitality
service companies in Parigi Moutong Regency. Participation in budgeting has a partly
significant effect on the managers' performance in hospitality service companies in Parigi Moutong Regency. The results of the budget emphasis and participation in budgeting can be used as a foundation in compiling a good budget program for hospitality service companies in Parigi Moutong District. Hotel services companies should instill corporate values to managers/owners to improve company performance.
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