Social capital and participative budgeting : a process thinking perspective

• Main Author: Al Hudithi, Faisal Abdyllah S.
• Other Authors: Rodgers, Waymond ; Khalil, Mohamed M.
• Published: University of Hull 2017
• Subjects: 658.15; Accounting
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.726872

Over the past years, participative budgeting has attracted researchers and scholars to investigate its impact on subordinates’ behaviours. Earlier empirical studies have investigated this impact as either a direct relationship, with the influence of a moderator or an antecedent or with both moderators and antecedents. Yet, prior studies’ findings were inconsistent with each other. This study depicts that participative budgeting is governed by the concept of Social Capital and its different dimensions, relational, structural and cognitive. Scholars conceptualised social capital as a set of social resources available through subordinates’ relations, which empower their communication with a variety of individuals. Further, this study investigates the impact of participative budgeting on subordinates’ behaviours by implementing the Throughput model. This model is a decision making model with four factors, linked with six different pathways. The factors are the perception of the individual, the information available for decision making, judgement and finally the decision made. The linking pathways, moreover, would reflect the rationalisation of the individual upon the availability of those different factors. This study examines how the employment of the throughput model can assist in deducting the impact of participative budgeting on subordinates’ behaviours. This study was implemented among Saudi Arabian mid-level managers working in manufacturing listed companies. A total of 283 surveys were analysed using a second generation statistical tool, SEM-PLS. The results reveal performance and satisfaction were impacted by their relational dimension of social capital. In other words, mid-level managers’ relations with other individuals will have a significant impact on their performance and satisfaction. The usage of social capital and the implementation of the throughput model advance the understating of the thinking process of those mid-level managers and ultimately the impact on their behaviours within participative budgeting settings.