Bottom-up (top-down) rolling budgeting and job autonomy: consequences for the role of role overload and managerial performance

ABSTRACT

Drawing on job demands-control theory, this study examined how bottom-up (BU) versus top-down (TD) approaches for implementing a rolling budget can impact lower-level managers’ performance. The analysis of survey data of 98 solar firms in Taiwan demonstrated that BU relative to TD rolling-budget approaches in three phases of the budgeting process (namely, the issuance of guidelines, development of the budget proposals, and negotiation of final budgets) increased self-perceived role overload among lower and middle-level managers. Further, the difference between BU and TD rolling-budget approaches in their effect on perceptions of role overload will be smaller when job autonomy is higher in the two phases of the budgeting process (namely, development of the budget proposals and negotiation of final budgets). Lastly, role overload was found to play a full mediating role in the relationship between rolling-budget approaches, and self-perceived performance in all three phases of the budget process. Overall, these insights suggest that in order to fully understand the consequences of rolling budgets, we should consider both job autonomy and role overload.

KEYWORDS:

• Bottom-up (top-down) rolling budgeting
• role overload
• job autonomy

Acknowledgments

The authors gratefully acknowledge comments from the anonymous reviewers, Iny Hwang (discussant), and workshop participants at the 3^rd Asian Accounting Associations Annual Conference. The first author would like to thank the Ministry of Science and Technology of the Republic of China (Taiwan) for financial support of this research under contract numbers of MOST 106-2410-H-141-016 -MY2.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Role overload occurs when a person is handed over a number of tasks with a short deadline (Kahn et al. 1964).

2. We acknowledge that in some circumstances, role overload can have a positive effect, as the role overload is seen as a challenge that is linked to an active problem-solving style. When people see additional workload as a challenge rather than a threat, it may result in higher performance outcomes. For instance, some managers have proactively taken on more responsibilities and tasks (i.e., proactive behavior). Ohly and Fritz (2010) investigated challenge appraisal as mediating functions to explain the relationship between time pressure and performance-related behaviors (i.e., creativity and proactive behavior) of engineers. However, the nature of the relationship between role overload and job performance relies on the nature of the task and the type of performance outcome examined (Jex 1998). Our performance variables are neither active job behavior nor creativity. Alternatively, the relationship between role overload and managerial performance can be curvilinear. Nevertheless, Dunk (1993) has explicitly tested this curvilinear relationship and concluded that a negative linear relationship exists. Accordingly, we argue that role overload has a negative (i.e., hindering) effect.

3. Several scholars argue that self-rated performance scores tend to exhibit less bias than supervisor ratings (Dunk 1993; Marginson and Ogden 2005; Parker and Kyj 2006). Westman and Eden (1991) raise the concerns about supervisor ratings – supervisors may inflate ratings of subordinates who are working in stressful situations.

4. Halo error refers to the tendency of raters to ‘“make global assessments of the variable and to be unable to differentiate their assessments on the various dimensions”’ (Brownell 1995, p. 45).

5. Because respondents are anonymous, we have difficulty in using the company’s performance evaluation that would be applicable to each manager. Additionally, these performance evaluations seem to be job and department specific, which decreased comparability across managers.

6. We conducted sensitivity analysis, which includes business unit size (SIZE) as a control variable. We attempt to control for whether the firms BU budgeting are sufficiently staffed. This variable was not significant and did not change our results.

7. We tested whether role overload is beneficial to performance by identifying threshold values under which the relationship between role overload and performance changes form positive to negative. However, we did not find any significant support for the potential inverted-U-shaped relationship between performance and role overload.

8. Sobel’s test is further used to assess the statistical significance of indirect relationships between an independent variable and a dependent variable through a mediating variable. We use the Aroian version of the Sobel test because it does not make the unnecessary assumption that the product of the standard errors is vanishingly small (Baron and Kenny 1986). Sobel tests confirm that role overload mediates the effects of BU rolling-budget approaches in the issuance of guidelines (−5.24, p < 0.01), the development of budget proposals (−135.18, p < 0.01) and the negotiation of final budgets (−136.09, p < 0.01) on managerial performance.