Faculty Scholarship 1994 - Present

The Effect of Performance Reporting on Budgetary Participation: An Attribution Theory Analysis

The study of the effect of budgetary participation on managerial performance has progressed from investigating the bivariate association between them to examining an array of variables that have been found to influence the nature of their relation. Little work, however, has examined the effect of subordinates' knowledge of their performance on their subsequent understanding of their participation in budgeting. Since the literature indicates that participation impacts managerial performance, then an analysis of the effects of performance reports on managers' perceptions of participation is critical because such perceptions can in turn lead to lower levels of performance. Attribution theory is used in this study to examine the extent to which performance knowledge influences the attributions managers make of their participation. According to attribution theory, depending on whether individuals perform successfully or unsuccessfully, they ascribe differential causes to their performance. The results of a laboratory experiment suggest that individuals use knowledge of their performance as a cue by which they attribute their performance to a specific level of participation, whereas poor performing individuals attributed their failiure to a lack of participation. Implications arising from these findings are discussed.