The Relationship Between Budget Participation, Organizational Commitment, The Use of Management Accounting System, The Use of Performance Measures Information, and Managerial Performance in Malaysian Local Authorities

This study examined the relationship between budget participation and managerial performance in Malaysian local authorities. In particular, it aims to identify the mediating effects of organizational commitment, the use of management accounting system (MAS), and the use of performance measures information. A total of 131 heads of department in Malaysian local authorities participated in the survey. A structural equation modeling was utilised to
examine the direct and indirect effects of budget participation on managerial performance through path analysis. The findings from the research revealed that budget participation influences managerial performance via the mediating variables of organizational commitment, the use of MAS, and the use of performance measures information. Several limitations may be noted in this study. First, the research survey was conducted only in local authorities. Thus, the results may not be generalized to other public organizations. Secondly, this study only involved organizational commitment, the use of MAS, and the use of performance measures information to explain the relationship of budget participation on managerial performance. Thirdly, the use of respondents’ perceptions to measure the constructs is subject to the respondent bias. The theoretical contribution of this study is to extend earlier literature by addressing the relationship in which, budget participation, organization commitment, the
use of MAS, and the use of the performance measures information can be interrelated in providing explanations of managerial performance. The practical contribution for this study is that its findings can have practical relevance in the current management setting in Malaysian government organization. The results from the present study also provide insights on the roles of budget participation
as management mechanism by local authorities’ managers in evaluating their performance.