From Hierarchy to Participation: How Leadership Shapes Budgetary Information Systems

Abstract—The purpose of this research is to understand the relationship between hierarchical level and the leadership style of an organization’s executives and its budgetary system. This study will also investigate the influence of other behavioral factors (information asymmetry, procedural fairness) and employees’ organizational commitment. Managers at different levels are involved in the budgetary system, each with different responsibilities. Their leadership style in helping subordinates achieve targets also influences the process. The present study aims to understand this scenario in the context of manufacturing companies in Bangladesh. For this study, the term budgetary system’ is conceptualized in terms of subordinates’ participation. This study excludes the technical aspects of budgeting, as the current literature has extensively studied those variables. Data will be collected through a Likert-type questionnaire survey. The study will measure the constructs by adapting scales from earlier studies. A Structural Equation Model will be used to measure the relationships among the variables. The expected outcomes of the study are: executives with higher responsibility and a supportive leadership style encourage subordinates’ participation in the budgetary process; second, the relationship between management level and leadership style of executives with participation in the budgetary system is moderated by the extent of information asymmetry and procedural fairness of budgeting; and third, employees who participate in the budgetary sytem feel increased level of organizational commitment.

Index Terms—budget, participation, management level and leadership style of executives, manufacturing companies