Budget-Related Behavior: Resolving A Portion Of The Performance Puzzle In The Management Accounting System

Abstract

An integral component of the management accounting system in large organizations is the budgeting system. Multiple budget-related behaviors (BRBs) characterize what man-agers do in overseeing the work task environment of various departmental units to achieve performance goals. However, just as a four-wheel drive vehicle comes as a com-plete system, not all of its operating components are activated simultaneously under all conditions. In the BRB/performance linkage, uncertainties in the work task environment critically determine which BRBs must be emphasized or de-emphasized for optimal per-formance. This paper uses a structural equation approach to model this uncertainty contingency and ferret-out the appropriate set of significant BRBs. This identification, in turn, helps to resolve part of the performance puzzle.