The current issue and full text archive of this journal is available at
http://www.emerald-library.com/ft
AAAJ
14,1
12
Received November 1997
Revised May 1999,
December 1999
Accepted March 2000
A ccounting, A uditing &
A ccountability Journal,
Vol. 14 No. 1, 2001, pp. 12-29.
# MCB University Press, 0951-3574
The relation between
decentralised structure,
budgetary participation and
organisational commitment
The moderating role of managers’ value
orientation towards innovation
Nava Subramaniam and Lokman Mia
Faculty of Commerce and Management,
School of Accounting and Finance, Griffith University Gold Coast,
Southport, Queensland, Australia
Keywords Innovation, Decentralization, Budgets, Participation, Commitment
Abstract Reports the results of a study which investigated the moderating role of managers’
value orientation towards innovation (VOI) on the relationships between managers’
organisational commitment and two management control features ± decentralised
organisational structure and budgetary participation. Data for the study were collected from
116 managers in manufacturing firms. The results indicate that managers’ VOI has a
significant moderating effect on the relationships between the two management control features
and managers’ organisational commitment. The results reveal that the relationships are stronger
for managers with high VOI than for managers with low VOI. These results have implications for
enhancing managers’ organisational commitment through the design of management control
systems appropriate for the extent of innovative work values promoted by organisations.
Introduction
Organisations gain competitive advantage by creating and exploiting market
opportunities through business strategies that adopt innovative ideas and
products. Such strategies are often supported by organisational cultures that
promote innovative values among their managers. In highly innovative
organisational cultures, values related to creativity, experimentation with new
and challenging ideas, and being less risk-averse are fostered among managers
(O’Reilly et al., 1991; Kimberley, 1981). Other researchers (Flamholtz, 1983;
Markus and Pfeffer, 1983; O’Connor, 1995) suggest that managers’ value
orientations at work have a significant influence on their attitudes towards
different management control features. Based on a contingency perspective, a
number of researchers argue further that the congruence between management
control features and managers’ value orientations at work is an important
The authors acknowledge the helpful comments by Z. Hoque, N. O’Connor, D. Sharma and the
participants at AAANZ Conference, 1997. The paper greatly benefited from the helpful
comments of three anonymous reviewers on earlier drafts. The study was funded by Griffith
University.
determinant of managerial job-related outcomes (Otley and Wilkinson, 1988; The moderating
O’Connor, 1995). O’Connor (1995), for instance, found that the congruence role of managers’
between managers’ value orientation for power distance and their participation VOI
in budget setting and in performance evaluation processes, leads to lower role
ambiguity and more favourable superior-subordinate relationships[1]. The
underlying premise for such an argument is that values are ``enduring belief(s)
that a specific mode of conduct or end-state of existence is personally or 13
socially preferable to an opposite or converse mode of conduct or end-state of
existence’’ (Rokeach, 1973, p. 5). The normative nature of values thus functions
as an important determinant of an individual’s attitudes and behaviour at work
(Rokeach, 1973). Empirical evidence supporting the importance of the
congruence between managers’ work-related values and management control
systems for managers’ job-related outcomes, however, remains scant.
Our literature review indicates that no study has examined the influence of
managers’ value orientation towards innovation on the relationship between
the management control features and managers’ job-related outcomes. Calls for
research in the area have been made by accounting researchers such as Moores
and Booth (1994, p. 23), who argue that:
. . . despite recognition of the potential importance of culture to MAS (i.e. management
accounting systems) design, there has been little attention to it within contingency-based
MAS research. Several authors have warned of the dangers of developing MAS in ways that
are inconsistent with the values and attitudes of individuals (Flamholtz, 1983; Markus and
Pfeffer, 1983; Dent, 1986; Williams and Hinings, 1988)[2].

Following Moores and Booth (1994), we believe that the present study is both
timely and warranted. Such evidence is important because it will guide the
design of effective and efficient management control systems based on the
extent to which innovative values are promoted within an organisation.
The purpose of this research is to examine whether managers’ value
orientation towards innovation (hereafter referred to as managers’ VOI)
moderates the relationship between management control features and
managers’ organisational commitment. Managers’ VOI is defined as the degree
of importance that managers place on being innovative and creative at work
(O’Reilly et al., 1991). Organisations that pursue creative and innovative
business strategies tend to engender high VOI among their managers (Russell
and Russell, 1992). The management control features selected for this study are
decentralised organisational structure (hereafter referred to as decentralised
structure) and budgetary participation. Decentralised structure relates to the
level of autonomy that managers have in decision-making (Gordon and
Narayanan, 1984) and budgetary participation refers to the extent to which
managers are involved with, and have influence on, the determination of their
budgets (Brownell, 1982). Our focus on these two management control features
is important for two reasons. First, decentralised structure and budgetary
participation are two common management control features adopted by
organisations for motivating and assisting managers in their work
performance. The extent to which these control features are adopted, however,
AAAJ differs across organisations (Bruns and Waterhouse, 1975). Second, previous
14,1 studies indicate that not all managers are comfortable with the same level of
decentralised structure and budgetary participation. Indeed, an inappropriate
level of decentralised structure and budgetary participation can lead to
unfavourable job-related outcomes such as invalid data reporting, low morale
and low job satisfaction (Shields and Shields, 1998; Otley and Wilkinson, 1988).
14 Such job-related outcomes, in turn, have implications for both managerial and
the overall organisational performance. We consider that a manager’s VOI is an
important factor that determines the manager’s acceptable level of
decentralised structure and budgetary participation in terms of fostering
favourable job-related outcomes. In other words, managers’ VOI is likely to
moderate the relationship between the two management control features
(decentralised structure and budgetary participation) and their organisational
commitment.
The next section of this paper draws on previous literature to develop the
theoretical framework for this study. The hypotheses are summarised in the
third section. The subsequent sections address the research method, results
and discussion of the findings.

Theoretical background
Organisational commitment is an important job-related outcome at the
individual level that has been linked to a number of other job-related outcomes
such as employees’ absenteeism, turnover, job effort and performance (Randall,
1990; Mathieu and Zajac, 1990). Mowday et al. (1982) argue that an
understanding of the processes related to organisational commitment has
implications for both the employees and organisations. From an individual’s
viewpoint, his or her commitment to an organisation may make the individual
more eligible to receive both extrinsic rewards such as bonuses and awards,
and intrinsic rewards such as job satisfaction and better relationships with
colleagues. From an organisation’s perspective, employees’ commitment is
important since it is seen to be negatively associated with their lateness to
work, absenteeism and turnover, which, in turn, have implications for overall
organisational performance.
Although organisational commitment has been conceptualised in multiple
ways, there are at least two major perspectives of the concept: an attitudinal
perspective and a calculative/normative perspective (Morrow, 1993). An
attitudinal perspective refers to the psychological attachment or affective
commitment formed by an employee in relation to his or her identification and
involvement with the organisation (Porter et al., 1974; Allen and Meyer, 1990).
The calculative/normative perspective refers to an employee’s commitment to
continue working for the firm based on the notion of weighing cost-benefits of
leaving an organisation (Herbiniak and Alutto, 1972; Allen and Meyer, 1990).
For the present study, organisational commitment is characterised as
employees’ acceptance of organisational goals and their willingness to exert
effort on behalf of the organisation. This definition follows the attitudinal
commitment formulated by Porter et al. (1974), which is by far the most The moderating
extensively used approach to organisational commitment (Morrow, 1993). role of managers’
Randall (1990) and Mathieu and Zajac (1990) report that attitudinal VOI
commitment has a stronger relationship with work outcomes than does
calculative/continuance commitment, and as such, the current study employs
the attitudinal commitment conceptualisation of organisational commitment.
Prior studies (e.g. Morrow, 1993; Mathieu and Zajac, 1990) suggest that, in 15
general, organisational commitment tends to increase as the level of
decentralised structure increases. However, the correlation between
organisational commitment and the extent of decentralisation seems to vary
considerably across different studies. For example, Mathieu and Hamel (1989)
report a correlation of only ±0.14 between low decentralised (i.e. high
centralised) structures and organisational commitment, while Brooke et al.
(1988) report a correlation of nearly ±0.40. Likewise, a range of low to high
correlations is reported in other studies (see Blegen et al., 1988; Barling et al.,
1990; Dornstein and Matalon, 1989; Bateman and Strasser, 1984). These results
suggest that the relationship between the extent of decentralised structure and
organisational commitment is somewhat unclear, with considerable variation
in the strength of the relationship across the different studies.
The literature (see Morrow, 1993; Mathieu and Zajac, 1990) also suggests
that a positive relationship exists between organisational commitment and
participative management processes (e.g. consultative planning and
participative decision making). However, in this case also, there is a wide
variation in the correlation between participative management processes and
organisational commitment across different studies (Meyer and Allen, 1988;
Gaertner and Nollen, 1989; Barling et al., 1990). The correlations reported in
these studies vary from 0.25 to 0.60. The considerable variation in the reported
correlations between the management control features and organisational
commitment suggest that there may be other variables influencing these
relationships. This study proposes that managers’ VOI is one such variable.
This argument is consistent with previous research examining differences in
the strength of the relationship between management control features and
managers’ job-related outcomes based on the moderating effect of individual
managers’ work-related values (O’Connor, 1995).
Managers’ VOI reflect their beliefs in undertaking an innovative and
creative approach to work (O’Reilly et al., 1991). Given that managers’ VOI
affect their work attitudes and choices in terms of the degree of novelty or
innovativeness in ideas, products or projects (Russell and Russell, 1992), it is
argued that their VOI will affect their preferences for management control
systems. For example, in comparison to managers with low VOI, managers
with high VOI are likely to be more motivated to pursue creative and
innovative ideas and projects. Such ideas and projects, however, will also
involve higher uncertainty and greater risks. Smith (1998) and Russell and
Russell (1992) argue that because managers who are innovative and creative
face greater uncertainty and risks, they will need to have more decision-making
AAAJ autonomy. It is argued that high decision-making autonomy will aid managers
14,1 in managing a less predictable and a more dynamic environment effectively.
The present study proposes that managers with high VOI perceive greater
need for decision-making autonomy or decentralised structure and greater need
for participation in budget setting than managers with low VOI. Consequently,
the relationships between the two management control features (decentralised
16 structure and budgetary participation) and managers’ organisational
commitment may be stronger for managers with high VOI than for managers
with low VOI. Specific hypotheses relating to each of the management control
feature of this study are developed in the next two sub-sections. The
framework for the study is provided in Figure 1.

Hypotheses development
Decentralised structure and organisational commitment
In a more decentralised structure, managers are provided with greater decision-
making autonomy for planning and control, including matters relating to
purchase of capital items, pricing of product and services, and the hiring and
firing of personnel. Dansereau et al. (1975) argue that bosses often attempt to
secure increased organisational commitment from subordinates by providing
them with greater discretion and influence. It is argued that subordinates with
high decision-making autonomy are likely to develop a greater sense of
responsibility through increased personal involvement in making decisions. In
turn, subordinates are expected to reciprocate by offering organisationally
desired contributions such as organisational commitment. Empirical findings
by Bateman and Strasser (1984) and Morris and Steers (1980) indicate positive
correlations between decentralised structure and organisational commitment.
Likewise, Mathieu and Zajac (1990) report a positive association between
managers’ task autonomy (whereby managers hold greater decision-making
authority over their work tasks) and organisational commitment. However, as
discussed in the previous section, the size of the correlations or the strength of
the relationship between structure and organisational commitment varies
considerably (see Morrow, 1993).
The present study proposes that a positive and stronger relationship exists
between decentralised structure and organisational commitment for managers
with high VOI than for managers with low VOI for the following two reasons.

Figure 1.
Conceptual model of the
study
First, managers with high VOI tend to face higher uncertainty in their work The moderating
environment because they will prefer to pursue more innovative ideas and role of managers’
projects, and such ideas and projects tend to entail lower predictability of VOI
returns and outcomes (Koberg and Chusmir, 1987). As the perceived level of
uncertainty among managers with high VOI tends to be high, they would
prefer higher autonomy in decision making because such autonomy will
provide greater flexibility for them to deal with unexpected contingencies or 17
situations. Thus, managers with high VOI are likely to be more motivated and
confident in administering innovative projects if they have greater autonomy in
deciding issues related to resource allocations, pricing and customer services
(Kim, 1980). Consequently, providing more decision-making autonomy for
managers with high VOI is likely to lead to greater organisational commitment.
However, managers with low VOI are likely to pursue more trialed and
tested projects that generally entail less uncertainty (Russell and Russell, 1992).
Consequently, the managers can operate more easily following prescribed rules
and guidelines (see Agarwal, 1993). In other words, this type of manager may
have less need for autonomy for decision making and therefore, view
decentralisation to be less important. It follows then that decentralisation in the
case of managers with low VOI may not be associated with enhanced
organisational commitment.
Second, previous research (Burns and Stalker, 1961; Russell and Russell,
1992) suggests that a more decentralised structure engenders the development
of creative ideas and new projects. On the contrary, in less decentralised
structures, managers may feel a relatively high likelihood that promising new
ideas can be screened out by top management (Pierce and Delbecq, 1977). In
particular, since new and innovative projects can be more risky, there is a
greater possibility that resources can be denied, or at least limited, by top
management in less decentralised structures. In turn, such decisions would lead
to a reduction in the number of innovations successfully adopted (Russell and
Russell, 1992). In other words, a less decentralised structure would be
restrictive for managers pursuing more innovative and experimental ideas. As
such, managers with high VOI are likely to seek a more decentralised structure
to maximise their chances for initiating and implementing projects that are
novel or creative, though risky. Consequently, as the chances for initiating and
implementing novel and creative projects increase for managers with high VOI
through having more autonomy and control over resources, they become more
ego-involved and committed to their work.
On the other hand, managers with low VOI who pursue more conservative
and stable projects would be less concerned over having decision-making
autonomy. This is because with more conservative and stable projects, many of
the decisions relating to project selection and implementation would have been
formalised through standard rules and procedures (Aiken and Hage, 1971).
Increasing managers’ decision-making autonomy may in fact be confusing for
the managers with low VOI because it raises opportunities for conflict between
a manager’s personal choice of action and that detailed by the standard rules
AAAJ and procedures. Thus, for managers with low VOI, increasing decision-making
14,1 autonomy will have little effect on their organisational commitment. Following
the above discussion, H1 is presented below:
H1: There is a significant interaction between decentralised structure and
managers’ VOI affecting their organisational commitment.
18 Budgetary participation and organisational commitment
Budgetary participation relates to the extent to which managers participate in
setting budgets. Prior studies suggest that managers’ participation in
budgeting may yield favourable job-related outcomes through greater
exchange of information, better coordination of activities and increased
employee involvement (Govindarajan, 1986; Mia, 1988; 1989). While there is no
study which has tested the direct relation between organisational commitment
and budgetary participation, the research on participatory management or
leadership style and organisational commitment suggests that it is likely that a
positive relation exists between the two variables (Jermier and Barkes, 1979;
Rhodes and Steers, 1981). For example, Rhodes and Steers (1981) indicate a
higher correlation between participatory management style and organisational
commitment in worker-owned organisations, as compared with conventional
firms. Jermier and Barkes (1979) found that participatory management style
was most effective in influencing the commitment levels of police officers.
Empirical findings suggest that managers are more likely to become ego-
involved with the targets that they are involved in setting (see Brownell, 1982).
Employees’ ego-involvement with their work-related targets may, in turn, be
transformed into their commitment to their organisation. In a similar vein, we
expect a positive relationship to exist between managers’ budgetary
participation and organisational commitment.
The present study proposes that a positive and stronger relationship exists
between budgetary participation and organisational commitment for managers
with high VOI than for managers with low VOI for the following two reasons.
First, managers with high VOI will hold higher levels of perceived uncertainty
because, as discussed in the previous section, more innovative projects entail
greater uncertainty and lower predictability of returns and outcomes (Koberg
and Chusmir, 1987). Innovation is a complex and ambiguous process that
requires the management of an extensive network of interactions and co-
ordination of activities as a new idea moves from conception to
implementation. Budgetary participation is seen to be beneficial when there are
high levels of uncertainty and task difficulty (Gordon and Narayanan, 1984;
Maloney and Mia, 1996). For instance, Mia (1993) argues that managers facing
high uncertainty in their work environment often require more information for
decision making and participation in budget setting acts as a mechanism for
managers to gather and exchange information. As such, managers with high
VOI, who tend to face less predictability in their work environment, will greatly
benefit from budgetary participation as it will help them better co-ordinate
their work activities and exchange job relevant information. In turn, such
managers will also be more willing to exert effort in achieving their goals and The moderating
consequently, will develop high organisational commitment. On the other hand, role of managers’
for managers with low VOI who tend to face higher predictability and VOI
formalisation in their work environment, budgetary participation becomes less
important for purposes of information exchange or co-ordination of work
activities.
Second, budgetary participation provides managers the opportunity to set 19
their own goals or performance targets (Brownell, 1982). Given that managers
with high VOI are involved in more innovative projects that entail greater
uncertainty as to outcomes and resource usage, it is likely that managers would
prefer to set their performance targets. In this way, they will feel more
confident that their performance targets are challenging yet realistic.
Consequently, managers with high VOI tend to become more ego-involved with
their budgets and such involvement is likely to be transformed into higher
organisational commitment. Thus, managers with high VOI are likely to
respond favourably to budgetary participation as it provides an opportunity
for personal involvement in the performance target setting process. In the case
of managers with low VOI, their pursuit of more conservative and stable
projects would lead to a less complex and more formalised budget planning
process. Thus, their need for participation in budget setting would be lower
than managers with high VOI. More specifically, budgetary participation by
managers with low VOI may not be associated with enhanced organisational
commitment.
Based on the discussion above, the following hypothesis is put forward:
H2: There is a significant interaction between budgetary participation and
managers’ VOI affecting their organisational commitment.

Method
The sample
A random sample of 60 companies employing 100 or more employees was
selected from the population of manufacturing organisations listed in the
Kompass Australia business directory. Companies with less than 100
employees were not expected to have clearly defined areas of responsibility to
which managers could be appointed (Dunk, 1993), therefore, they were not
included in the sample. An initial telephone call to the human resource or
administration manager in the selected companies was made to obtain names
of department-level managers who had responsibility over a budget. A total of
251 managers were then contacted by either telephone or fax requesting them
to take part in the research. Sampling was not restricted to any one functional
area since there is no valid reason for doing so. A questionnaire attached to a
cover letter, explaining the purpose of the study and assuring anonymity, was
mailed to each participant manager. A reply-paid self-addressed envelope was
also attached to the cover letter requesting the participants to return the
completed questionnaire direct to the researchers. A follow-up telephone call
was made in order to promote a higher response rate.
AAAJ A total of 122 responses were returned yielding a response rate of 48.6 per
14,1 cent and 45 companies were represented in the sample. Of the 122 responses,
116 were usable as six responses were incomplete, therefore, excluded from the
data set. This leaves the study with 116 useable responses. The respondents
were between 25-50 years of age, had held their current positions for an average
of 4.2 years and had been employed by their respective companies for an
20 average of 11.7 years. The average number of employees in their area of
responsibility was 77.

Measurement of variables
Organisational commitment. This study adopts the attitudinal view of
organisational commitment; it is defined as employees’ identification with, and
acceptance of, their organisational goals and values, their willingness to exert
considerable effort on behalf of the organisation and their desire to maintain
organisational membership (Mowday et al., 1982). The construct was assessed
using the 12-item short-form version of the Organisational Commitment
Questionnaire developed by Mowday et al. (1982). The response format was a
seven-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly
agree). The internal reliability of the scale assessed by Cronbach (1951) alpha
was 0.87 for this study. This is comparable to the original 15-item
questionnaire which yielded Cronbach alpha values ranging from 0.82-0.93.
Table I presents the descriptive statistics for the variable.
Budgetary participation. The Milani (1975) six-item, seven-point Likert-type
scale instrument was used to assess participation in budgeting. The instrument
has been extensively used in earlier studies and has provided high internal
reliability (Brownell, 1982; Mia, 1989; Harrison, 1992). Participants were asked
to respond to each item on a seven-point scale ranging from 1 (representing low
participation) to 7 (representing high participation). The Cronbach (1951) alpha
of 0.84 obtained for the scale in the study indicates a high internal reliability.
Table I presents the descriptive statistics for the variable.
Decentralised structure. Gordon and Narayanan’s (1984) instrument was
used to assess the level of decentralisation of structure in the organisations.
The instrument consists of five items assessing the extent to which authority
has been delegated to appropriate managers for five classes of decisions, i.e.
development of new products and services; hiring and firing of personnel;
purchase of capital equipment; pricing and distribution of products/services.

Actual range Theoretical range

Variables n Mean Std dev. Min. Max. Min. Max.

Managers’ VOI 116 3.38 0.63 1.6 4.8 1.0 5.0

Table I. Decentralised structure 116 4.69 1.16 1.0 6.8 1.0 7.0
Descriptive statistics of Budgetary participation 116 5.33 1.09 2.0 7.0 1.0 7.0
variables Organisational commitment 116 5.23 0.86 2.0 6.5 1.0 7.0
Participants were asked to respond to each item on a seven-point scale ranging The moderating
from 1 (representing low decentralisation) to 7 (representing high role of managers’
decentralisation). The Cronbach (1951) alpha of 0.75 for the scale in the study VOI
indicates an acceptable level of internal reliability. Table I presents the
descriptive statistics for the variable.
Managerial value orientation towards innovation. The construct was
measured using a six-item instrument which was adapted from the O’Reilly et 21
al. (1991) and Windsor and Ashkanasy (1996) studies[3]. The items (as shown
in the Appendix) include innovation, opportunities, experimenting, risk-taking,
being careful and rules-orientation. The instrument follows an introductory
paragraph, which states:
Every organisation has its own culture which is a set of values that might be expected or
implicitly required of members of that organisation. The following statements listed below
are values that have been found prevalent in different organisations.

Participants were asked to respond indicating the extent to which they as a

member of their organisation value the concept of innovation under each item
in the instrument on a five-point scale ranging from 1 (not at all) to 5 (to a very
great extent). The internal reliability assessed by Cronbach (1951) alpha for the
measure in this study was 0.75. A factor analysis was also conducted and only
one factor was derived which explained 42.8 per cent of the variance and an
eigenvalue of 2.57. This indicates that the construct is uni-dimensional. Table I
presents the descriptive statistics for the instrument.

Data analyses
H1 and H2 imply that managers’ VOI moderates the relation between the
decentralised structure and commitment and that between budgetary
participation and commitment. In other words, VOI and the decentralised
structure, and VOI and budgetary participation interact to influence
organisational commitment. If the interaction is significant, it would mean that
the relations between the management control features and organisational
commitment are stronger for managers with high VOI than for managers with
low VOI. To test the hypotheses, we divided the sample into high VOI and low
VOI groups based on the mean score of the managers’ VOI. There were 58
subjects in each group. Following Brownell (1985), the hypotheses were tested
using the following regression equation:
Y ˆ a0 ‡ a1 X1i ‡ a2 X2 ‡ a3 X1i X2 ‡ e …1†

where
Y = Organisational commitment
X1i = Management control features (i ˆ 1 for decentralised structure (D),
and i ˆ 2 for budgetary participation (BP))
X2 = Managers’ value orientation towards innovation
(0 for low VOI and 1 for high VOI).
AAAJ A significant coefficient, a3 , in equation (1) would indicate that the slope of
14,1 Y ˆ f …X1i † is significantly different across the two levels of managers’ VOI,
thus supporting H1 and H2 (see Mia and Chenhall, 1994; Brownell, 1985). As is
the case in all regression studies not employing ratio scaled data, only the
highest order interaction term is interpretable (Southwood, 1978).
Consequently, no attempt was made to interpret the coefficients relating to the
22 main effect of the extent of decentralised structure or budgetary participation
in equation (1). Using the value of VOI = 1, and 0, equation (1) can be
reconstructed for managers with high and low VOI respectively as presented
below:
For low VOI managers: Y ˆ a0 ‡ a1 X1i …2†

and,
For high VOI managers: Y ˆ …a0 ‡ a2 † ‡ …a1 ‡ a3 †X1i …3†

Results
Table II presents the correlation matrix for the variables in the model. It can be
observed from the table that the correlation between the decentralised structure
and budgetary participation is 0.54 and significant. Although the correlation is
relatively high, we do not consider that it creates a problem for the results for
two reasons. First, the correlation is much lower than the level (0.80 and above)
that may be considered to cause the problem of multicollinearity (see Nie et al.,
1975). Second, we do not include the two variables in the same equation to test
our hypothesis.
H1 posits that there is a significant interaction between decentralised
structure and managers’ VOI affecting organisational commitment. To support
the hypothesis, a3 in equation (1) must be positive and significant. The results
presented in Table III indicate exactly that. It can be observed from the table
that the coefficient is positive and significant (p < 0.0006), thus supporting the
hypothesis. The model explains 25.4 per cent of the variance (adj. R2 = 0.254,
F = 14.03, p < 0.001) in organisational commitment.
H2 posits that there is a significant interaction between the budgetary
participation and managers’ VOI affecting organisational commitment. Again,
to support the hypothesis, a3 in equation (1) must be positive and significant.

Decentralised Budgetary Organisational

VOI structure participation commitment

Decentralised structure 0.325* 1.000

Budgetary participation 0.158 0.542** 1.000
Organisational commitment 0.289* 0.413** 0.299* 1.000
Table II.
Correlation matrix of Note: Significance levels are based on two-tailed test
the variables ** p < 0.00; * p < 0.05
As in the case of H1 above, the results presented in Table IV indicate that the The moderating
coefficient is positive and significant (p < 0.001), thus supporting the role of managers’
hypothesis. The model explains 18.4 per cent of the variance (adj. R2 = 0.184, F VOI
= 9.65, p < 0.001) in organisational commitment.
To present more clearly the difference in the slope of the relationship
between decentralised structure and organisational commitment with respect
to low and high VOI, the values from Table III for the relevant coefficients in 23
equation (1) are inserted to obtain equations (2a) and (3a):
Y ˆ 4:88 ‡ 0:11D for managers with low VOI; …2a†

and
Y ˆ 2:50 ‡ 0:56D for managers with high VOI …3a†

The results clearly indicate that the relationship between decentralised

structure and organisational commitment is positive and stronger for
managers with high VOI than for managers with low VOI. A comparison of the
regression coefficient of decentralised structure in equation (2a) and (3a) (i.e.
0.11 and 0.56 respectively) indicates that a unit increase in decentralised
structure has at least a five-fold effect on managers’ organisational
commitment for managers with high VOI than for managers with low VOI (see
Figure 2).
Likewise, in the case of budgetary participation, when the values from Table
IV for the relevant coefficients are inserted into equation (3), we obtain:
Y ˆ 5:23 ‡ 0:03BP for managers with low VOI …2b†

Coefficient
Variables Coefficient value (­ ) T-stat value Sig. p
Table III.
X11 Decentralised structure a1 0.11 1.225 0.2230 Test of H1: effects of
X2 Managers’ VOI a2 ±2.38 ±3.845 0.0002 decentralised structure
X3 Interaction term a3 0.45 3.520 0.0006 on organisational
Constant a0 4.88 11.366 0.0001 commitment across
high and low
Notes: Adj. R2 = 0.254, F = 14.03, p < 0.001 managers’ VOI

Coefficient
Variables Coefficient value (­ ) T-stat value Sigf. p
Table IV.
X12 Budgetary participation a1 0.03 0.299 0.7656 Test of H2: effects of
X2 Managers’ VOI a2 ±2.85 ±3.686 0.0004 budgetary participation
X3 Interaction term a3 0.47 3.312 0.0012 on organisational
Constant a0 5.23 9.836 0.0001 commitment across
high and low
Notes: Adj. R2 = 0.184, F = 9.65, p < 0.001 managers’ VOI
AAAJ and
14,1 Y ˆ 2:38 ‡ 0:50BP for managers with high VOI …3b†

Again, the results clearly indicate that the relationship between budgetary
participation and organisational commitment is positive and stronger for
managers with high VOI than for managers with low VOI. A comparison of the
24 regression coefficient of budgetary participation in equation (2b) and (3b)
indicates that a unit increase in budgetary participation has a more dramatic
(i.e. almost 17-fold) impact on the organisational commitment for managers
with high VOI than for managers with low VOI. In fact, for managers with low
VOI, the effect of budgetary participation on managers’ organisational
commitment is almost negligible (see Figure 3).

Discussion and conclusions

The results of the study are pleasing as both H1 and H2 are supported. The
hypotheses posit that decentralised structure and budgetary participation
interact with managers’ VOI to influence their organisational commitment.
Therefore, the results uphold the fundamental argument in the study. The
argument is that the impact of increasing decentralisation on organisational
commitment is significantly stronger for managers with high VOI than for
managers with low VOI. Similarly, the impact of increasing budgetary
participation on organisational commitment is significantly stronger for
managers with high VOI than for managers with low VOI. In other words,
managers having high VOI are likely to be more committed to their

Figure 2.
Relationship between
organisational
commitment and
decentralisation: low
and high

Figure 3.
Relationship between
organisational
commitment and
budgetary participation:
low and high VOI
organisation if they work under increased decentralised structure or if their The moderating
budgetary participation is high. Thus, the study supports the argument that role of managers’
the design of a control system in an organisation needs to consider the VOI
characteristics of the managers’ value orientations, the organisation’s structure
and its core control system including budgetary system (see Flamholtz, 1983;
O’Connor; 1995). Based on the results, we further argue that for organisations
pursuing business strategies premised on innovation and creativity, the 25
encouragement of managers’ participation in budget setting and high decision-
making autonomy are two important factors that would enhance managers’
organisational commitment.
These results should, however, be interpreted in light of a number of
limitations of the study. First, the six-item measure of managers’ VOI is novel
in the sense that it was adapted for the first time from the bigger instrument
developed by O’Reilly et al. (1991). Although the high alpha score (0.87)
indicates satisfactory internal reliability and the factor analysis of the
instrument indicates the construct as being unidimensional, further tests for
robustness including replicability need to be carried out. The second limitation
of the study is that it provides data at a particular point in time, i.e. a snapshot
view. A longitudinal study may aid in understanding the factors that may
change managers’ VOI and how the changes, in turn, may affect the
organisation’s structure, its budgetary systems and subsequently managers’
organisational commitment. Third, it is necessary to acknowledge the usual
caveats of cross-sectional based survey research. In particular, inferences of
causation implied are all based on theoretical positions taken.
Given the above limitations, the results of the study contribute to theory
building and practice. By revealing the moderating role of managers’ VOI in
the relations between decentralised structure and managers’ organisational
commitment as well as between budgetary participation and managers’
organisational commitment, the study contributes to theory building. To the
best of our knowledge, no previous study in the area has empirically tested the
above relations. The study contributes to practice by identifying the
importance of having a more decentralised structure and high budgetary
participation for promoting organisational commitment among managers with
high VOI.
Future research can focus usefully on several related avenues of enquiry.
First, the research could provide further evidence confirming the results of the
present study while overcoming some of its limitations. In particular, the
relation between managers’ VOI and organisational structure with other job-
related outcomes such as managerial job satisfaction and performance can be
investigated. Second, managers’ value orientation at work is a multi-
dimensional concept incorporating orientation towards teamwork, attention to
detail and stability (see O’Reilly et al., 1991). Future research can direct its
attention towards understanding how these different value orientations of
managers are related to management control systems and managerial job-
related outcomes. And third, with a strengthened theoretical basis, research
AAAJ relating to other management controls such as budget-based compensation,
14,1 controllability filters and budget-based performance measures can be
examined. Such research would extend our understanding of how complex
management controls could operate in concert with managers’ value
orientations to produce the desired outcome at work.

26 Notes
1. Managers with low value orientation towards power distance are characterised by their
preference for more participative leadership (Pratt and Beaulieu, 1992). By contrast,
managers with high value orientation for power distance are characterised by their greater
willingness to accept a more directive and autocratic leadership.
2. Management accounting systems which include an organisation’s budget planning and
performance evaluation processes form part of overall management control systems
(Moores and Booth, 1994).
3. The value factor relating to innovation was originally identified by O’Reilly et al. (1991) by
using a 54-item instrument. Subsequent studies by Chapman and Jehn (1994), Windsor and
Ashkanasy (1996) also provided further replications of the value factor relating to
innovation. In all the three studies, the innovation value factor was distinct with a high
percentage of variance explained (13.0 per cent, 13.2 per cent and 4.8 per cent respectively).
Further, the six factor items: innovation, opportunities, experimenting, risk-taking, careful
and rules oriented were chosen since they had consistently loaded on the innovation value
factor in the previous studies.

References
Agarwal, S. (1993), ``Influence of formalisation on role stress, organisational commitment, and
work alienation of salespersons: a cross-national comparative study’’, Journal of
International Business Studies, Vol. 24, pp. 715-39.
Aiken, M. and Hage, J. (1971), ``The organic organisation and innovation’’, Sociology, Vol. 5,
pp. 63-82.
Allen, N.J. and Meyer, J.P. (1990), ``The measurement and antecedents of affective, continuance
and normative commitment to the organisation’’, Journal of Occupational Psychology,
Vol. 63, pp. 1-18.
Barling, J., Wade, B. and Fullager, C. (1990), ``Predicting employee commitment to company and
union: divergent models’’, Journal of Occupational Psychology, Vol. 63, pp. 49-61.
Bateman, T.S. and Strasser, S. (1984), ``A longitudinal analysis of the antecedents of
organisational commitment’’, Academy of Management Journal, Vol. 27, pp. 95-112.
Blegen, M.A., Mueller, C.W. and Price, J.L. (1988), ``Measurement of kinship responsibility for
organisational research’’, Journal of Applied Psychology, Vol. 73, pp. 402-9.
Brooke, P.P., Russell, D.W. and Price, J.L. (1988), ``Discriminant validation of measures of job
satisfaction, job involvement and organisational commitment’’, Journal of Applied
Psychology, Vol. 73, pp. 402-9.
Brownell, P. (1982), ``Participation in the budgeting process: when it works and when it doesn’t’’,
Journal of Accounting Literature, Vol. 1, pp. 124-53.
Brownell, P. (1985), ``Budgetary systems and the control of functionally differentiated
organisational activities’’, Journal of Accounting Research, Vol. 23 pp. 502-12.
Bruns, W.J. and Waterhouse, J.H. (1975), ``Budgetary control and organisational structure’’,
Journal of Accounting Research, Autumn, pp. 177-203.
Burns, T. and Stalker, M. (1961), The Management of Innovation, Tavistock, London.
Chatman, J.A. and Jehn, K.A. (1994), ``Assessing the relationship between industry characteristics The moderating
and organizational culture: how different can you be?’’, Academy of Management Journal,
Vol. 37, pp. 522-53. role of managers’
Cronbach, L.T. (1951), ``Coefficient alpha and the internal structure of tests’’, Psychometrika, VOI
September, pp. 297-334.
Dansereau, F. Jr, Graen, G. and Haga, W.J. (1975), ``A vertical dyad linkage approach to
leadership within formal organisations’’, Organisational Behavior and Human
Performance, Vol. 13, pp. 46-78.
27
Dent, J. (1986), ``Organisational research in accounting: perspectives, issues and a commentary’’,
in Bromwich, M. and Hopwood, A.G. (Eds), Research and Current Issues in Management
Accounting, Pitman, London.
Dornstein, M. and Matalon, Y. (1989), ``A comprehensive analysis of the predictors of
organisational commitment: a study of voluntary army personnel in Israel’’, Journal of
Vocational Behavior, Vol. 34, pp. 192-203.
Dunk, A. (1993), ``The effects of job-related tension on managerial performance in participative
budget settings’’, Accounting, Organizations and Society, Vol. 18, pp. 575-85.
Flamholtz, E.G. (1983), ``Accounting, budgeting and control systems in their organisational
context: theoretical and empirical perspectives’’, Accounting, Organisations and Society,
Vol. 8, pp. 153-69.
Gaertner, K.N. and Nollen, S.D. (1989), ``Career experiences, perceptions of employment practices,
and psychological commitment to the organization’’, Human Relations, Vol. 42, pp. 975-91.
Gordon, L.A. and Narayanan, V.K. (1984), ``Management accounting systems, perceived
environmental uncertainty and organisational structure: an empirical investigation’’,
Accounting, Organisations and Society, Vol. 9, pp. 33-47.
Govindarajan, V. (1986), ``Impact of participation in the budgetary process on managerial
attitude and performance: universalistic and contingency perspectives’’, Decision Sciences,
pp. 496-516.
Gul, F.A., Tsui, J.S.L., Fong, S.C.C., and Kwok, H.Y.L. (1995), ``Decentralisation as a moderating
factor in the budgetary participation-performance relationship: some Hong Kong
evidence’’, Accounting and Business Research, Vol. 25, pp. 107-13.
Harrison, G.L. (1992), ``The cross-cultural generalizabilty of the relation between participation,
budget emphasis and job-related attitudes’’, Accounting, Organisations and Society,
Vol. 17, pp. 1-15.
Herbiniak, L.G. and Alutto, J.A. (1972), ``Personal and role-related factors in the development of
organisational commitment’’, Administrative Science Quarterly, Vol. 17, pp. 555-73.
Jermier, J.M. and Barkes, L.J. (1979), ``Leader behaviour in a police command bureaucracy: a
closer look at the quasi-military model’’, Administrative Science Quarterly, Vol. 24, pp. 1-23.
Kim, L. (1980), ``Organisational innovation and structure’’, Journal of Business Research, Vol. 8,
pp. 225-46.
Kimberley, J. (1981), ``Managerial innovation’’, in Nystrom, P. and Starbuck,W. (Eds), Handbook
of Organisational Design, Oxford University Press, Oxford.
Koberg, C.S. and Chusmir, L.H. (1987), ``Organisational culture relationships with creativity and
other job-related variables’’, Journal of Business Research, Vol. 15, pp. 397-409.
Kompass Australia (1995/1996), ``Prahran’’, Peter Issacson.
Magner. N., Welker, R.B. and Campbell, T.L. (1996), ``Testing a model of cognitive budgetary
participation processes in a latent variable structural equations framework’’, Accounting
and Business Research, Vol. 27, pp. 41-50.
AAAJ Maloney, S. and Mia, L. (1996), ``Organisational strategy, budgetary, participation and
managerial performance’’, Proceedings of the British Accounting Association Conference.
14,1
Markus, M.L. and Pfeffer, J. (1983), ``Power and the design of implementation of accounting and
control systems’’, Accounting, Organizations and Society, Vol. 18, pp. 266-85.
Mathieu, J.E. and Hamel, K. (1989), ``A causal model of antecedents of organisational commitment
among professionals and nonprofessionals’’, Journal of Vocational Behaviour, Vol. 34,
pp. 299-317.
28
Mathieu, J.E. and Zajac, D.M. (1990), ``A review and meta-analysis of the antecedents, correlates,
and consequences of organisational commitment’’, Psychological Bulletin, Vol. 108,
pp. 171-94.
Meyer, J.P. and Allen, N.J. (1988), ``Links between work experiences and organisational
commitment during the first year of employment: a longitudinal analysis’’, Journal of
Occupational Psychology, Vol. 61, pp. 195-209.
Mia, L. (1988), ``Managerial attitude, motivation and the effectiveness of budgetary participation’’,
Accounting, Organisations and Society, Vol. 13, pp 465-75.
Mia, L. (1989), ``The impact of participation in budgeting and job difficulty on managerial
performance and work motivation: a research note’’, Accounting, Organisations and
Society, Vol. 14, pp. 347-57.
Mia, L. (1993), ``The role of MAS information in organisations: an empirical study’’, British
Accounting Review, Vol. 25, pp. 269-85.
Mia, L. and Chenhall, R.H. (1994), ``The usefulness of management accounting systems,
functional differentiation and managerial effectiveness’’, Accounting, Organizations and
Society, Vol. 19, pp. 1-13.
Milani, K. (1975), ``The relationship of participation in budget setting to industrial supervisor
performance and attitudes: a field study’’, The Accounting Review, Vol. 50, pp. 274-84.
Moores, K. and Booth, P. (1994), Strategic Management Accounting: Australasian Cases, Wiley,
Queensland.
Morris, J.H. and Steers, R.M. (1980), ``Structural influences on organisational commitment’’,
Journal of Vocational Behaviour, Vol. 17, pp. 50-7.
Morrow, P.C. (1993), ``The theory and measurement of work commitment’’, Monographs In
Organisational Behavior and Industrial Relations, Vol. 15, pp. 213-20.
Mowday, R.T., Porter, L.W. and Steers, R.M. (1979), ``The measurement of organisational
commitment’’, Journal of Vocational Behaviour, Vol. 14, pp. 224-7.
Mowday, R.T., Porter, L.W. and Steers, R.M. (1982), Organisational Linkages: The Psychology of
Commitment, Absenteeism and Turnover, Academic Press, New York, NY.
Nie, N.H., Hull, C.H., Jenkins, J.G., Steinbrenner, K. and Bent, D.H. (1975), Statistical Package for
the Social Sciences, McGraw-Hill, Maidenhead.
O’Connor, N.G. (1995), ``The influence of organizational culture on the usefulness of budget
participation by Singaporean-Chinese managers’’, Accounting, Organizations and Society,
Vol. 20, pp. 383-403.
O’Reilly, C.A., Chatman, J. and Caldwell, D.F. (1991), ``People and organisational culture: a profile
comparison approach to assessing person organisation fit’’, Academy of Management
Journal, Vol. 34, pp. 487-516.
Otley, D.T. and Wilkinson, C. (1988), ``Organisation behaviour: strategy, structure and
environment and technology’’, in Ferris, K.R. (Ed.), Behavioural Accounting Research: A
Critical Analysis, Century Publishing, Columbus, OH.
Pierce, J. and Delbecq, A. (1977), ``Organisation structure, individual attitudes and innovation’’,
Academy of Management Review, Vol. 2, pp. 27-37.
Porter, L.W., Steers, R.M., Mowday, R.T. and Boulian, P.V. (1974), ``Organisational commitment, The moderating
job satisfaction, and turnover among psychiatric technicians’’, Journal of Applied
Psychology, Vol. 59, pp 603-9. role of managers’
Pratt, J. and Beaulieu, P. (1992), ``Organizational culture in public accounting: size, technology, VOI
rank and functional area’’, Accounting, Organizations and Society, Vol.17, pp. 667-84.
Randall, D.M. (1990), ``The consequences of organisational commitment: methodological
investigation’’, Journal of Organisational Behaviour, Vol. 11, pp. 361-78.
Rhodes, S.R. and Steers, R.M. (1981), ``Conventional vs worker-owned organisations’’, Human
29
Relations, Vol. 34, pp. 1013-35.
Rokeach, M. (1973), The Nature of Human Values, Free Press, New York, NY.
Russell, R.D. and Russell, C.J. (1992), ``An examination of the effects of organisational norms,
oganisational structure and environmental uncertainty on entrepreneurial strategy’’,
Journal of Management, Vol. 18, pp. 639-56.
Shields, J.F. and Shields, M.D. (1998), ``Antecedents to participative budgeting’’, Accounting,
Organizations and Society, Vol. 23, pp. 49-76.
Smith, M. (1998), ``Innovation and the great ABM trade-off’’, Management Accounting, Vol. 76,
pp. 24-6.
Southwood, K. (1978), ``Substantive theory and statistical interaction: five models’’, American
Journal of Sociology, Vol. 83, pp. 79-95.
Williams, J.J. and Hinings, C. R. (1988), ``A note on matching control system implications with
organisational characteristics: ZBB and MBO revisited’’, Accounting, Organizations and
Society, Vol. 13, pp. 191-8.
Windsor, C.A. and Ashkanasy, N.M. (1996), ``Auditor independence decision-making: the role of
organisational culture perceptions’’, Behavioral Research in Accounting, Vol. 8,
Supplement, pp. 80-98.

Appendix. Instrument assessing managers’ VOI

Every organisation has its own culture which is a set of values that might be expected or
implicitly required of members of that organisation. The following statements listed below are
values that have been found prevalent in different organisations.
Please place one number (i.e. 1, 2, 3, 4 or 5) against each of the following six items to indicate
the extent to which you as a member of your organisation value:
1 2 3 4 5
Not at all To a To a To a To a very
slight extent moderate extent great extent great extent
(1) Being innovative 1 2 3 4 5
(2) Being quick to take advantage
of opportunities 1 2 3 4 5
(3) Having a willingness to
experiment with new ideas 1 2 3 4 5
(4) Being risk-taking 1 2 3 4 5
(5) Being careful* 1 2 3 4 5
(6) Being rules oriented* 1 2 3 4 5
* These items were reverse coded