Date of Award

1-1-2001

Document Type

Thesis

Publisher

Edith Cowan University

Degree Name

Doctor of Philosophy

Faculty

Faculty of Business and Public Management

First Supervisor

Associate Professor Atique Islam

Second Supervisor

Professor Gary Monroe

Third Supervisor

Richard McKenna

Abstract

This study investigates the influence of politics on the budgeting process within the fertiliser manufacturing industry in Indonesia. Prior budgeting studies have focused on one of the following three theoretical frameworks - economic, psychological, and social. This study expands the research corpus by assessing the effect of politics on the budgeting process. The objectives of this study arc: (a) to investigate the effect of politics in the relationship between managerial roles and budgeting process – budgetary participation, budgetary communication, and budgetary control including budgetary monitoring and budgetary evaluation, and (b) to assess the impact of structural and individual power on the budgeting process. The study uses a mixed research methodology survey method supplemented by interviews. The survey questionnaire is adapted from previous studies. The sample for this study consists of four fertiliser-manufacturing enterprises in the state owned sector of Indonesia. The respondents of the survey questionnaire were middle managers responsible for unit budgets in the sample companies. Respondents were asked to rate on a seven-point scale their agreement or disagreement with issues concerning the budgeting process, managerial roles and politics. Survey interviews, based on the questionnaire, were developed for a select group of respondents, consisting of middle and senior managers. The results of the study, both survey questionnaire and interviews, indicate that politics has significant influence on the budgeting process. Further, it showed that the influence appeared different, depending whether structural or individual power is involved. The major implications of this study centre on the strong moderating effect of politics on the relationship between the budgeting process and managerial roles: this seems to be a relevant construct and should be developed further. Hopefully, the study will advance the thinking of scholars in this area and create interest in replicating this method of analysis and validating the findings. The conceptual model should also be applied to the role of politics on the budgeting process in other industries to assess the external validity of the model.

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