Using negotiated budgets for planning and performance evaluation: An experimental study

DC FieldValueLanguage
dc.contributor.authorArnold, Markus C.
dc.contributor.authorGillenkirch, Robert M.
dc.date.accessioned2021-12-23T16:09:17Z-
dc.date.available2021-12-23T16:09:17Z-
dc.date.issued2015
dc.identifier.issn03613682
dc.identifier.urihttps://osnascholar.ub.uni-osnabrueck.de/handle/unios/8713-
dc.description.abstractBudgets are often simultaneously used for the conflicting purposes of planning and performance evaluation. While economic theory suggests that firms should use separate budgets for conflicting purposes this contrasts with existing evidence that firms rarely do so. We address two open questions related to these observations in an experiment. Specifically, we investigate how a planning task that is in conflict with the performance evaluation task affects behavior in budget negotiations and their outcomes. Additionally, we analyze whether a single budget can be effectively used for both purposes compared to two separate budgets. We develop theory to predict that adding a planning task that is in conflict with the superior's performance evaluation task increases the subordinate's cooperation in and after the negotiation of a performance evaluation budget. Moreover, we predict that subordinate cooperation increases even more when the superior is restricted to use a single budget for both purposes. Our results broadly support our hypotheses. Specifically, we find that when budgets are used for both planning and performance evaluation, this increases the subordinate's budget proposals during the negotiation and his performance after the negotiation. These effects tend to be even larger when the superior is restricted to a single budget rather than separate budgets for planning and performance evaluation, particularly with respect to subordinate performance. In our experimental setting, the benefits of increased subordinate cooperation even more than offset the loss in flexibility from the superior's restriction to a single budget. The results of this study add to the understanding of the interdependencies of conflicting budgeting purposes and contribute to explain why firms often use a single budget for multiple purposes. (C) 2015 Elsevier Ltd. All rights reserved.
dc.language.isoen
dc.publisherPERGAMON-ELSEVIER SCIENCE LTD
dc.relation.ispartofACCOUNTING ORGANIZATIONS AND SOCIETY
dc.subjectACCOUNTABILITY
dc.subjectBACKWARD INDUCTION
dc.subjectBusiness & Economics
dc.subjectBusiness, Finance
dc.subjectINFORMATION ASYMMETRY
dc.subjectINTEGRATIVE NEGOTIATION
dc.subjectMANAGERIAL PERFORMANCE
dc.subjectMODEL
dc.subjectRECIPROCITY
dc.subjectREFERENCE POINTS
dc.subjectRESOURCE-ALLOCATION
dc.subjectTASK COMPLEXITY
dc.titleUsing negotiated budgets for planning and performance evaluation: An experimental study
dc.typejournal article
dc.identifier.doi10.1016/j.aos.2015.02.002
dc.identifier.isiISI:000355886000001
dc.description.volume43
dc.description.startpage1
dc.description.endpage16
dc.identifier.eissn18736289
dc.publisher.placeTHE BOULEVARD, LANGFORD LANE, KIDLINGTON, OXFORD OX5 1GB, ENGLAND
dcterms.isPartOf.abbreviationAccount. Organ. Soc.
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