A SEM-NCA approach towards the impact of participative budgeting on budgetary slack and managerial performance: The mediating role of leadership style and leader-member exchange

Author:

Khalid Hasan Al Jasimee, Francisco Javier Blanco-Encomienda

Keyword:

Economics, General Economics, General Economics (econ.GN)

journal:

date:

2023-10-15 16:00:00

Abstract

This study re-examines the impact of participative budgeting on managerial performance and budgetary slack, addressing gaps in current research. A revised conceptual model is developed, considering the conditioning roles of leadership style and leader-member exchange. The sample includes 408 employees with managerial experience in manufacturing companies. Hypotheses are tested using a combination of PLS-SEM and Necessary Condition Analysis (NCA). The results demonstrate that participative budgeting negatively affects budgetary slack and directly influences managerial performance, leadership style, and leader-member exchange. Moreover, leadership style and leader-member exchange moderate these relationships. The integration of NCA in management accounting research provides valuable insights for decision-makers, allowing for more effective measures. This study contributes by encouraging a complementary PLS-SEM and NCA approach to examine conditional effects. It also enhances understanding of budgetary control by highlighting the importance of leadership in influencing participative budgeting outcomes.

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