THE EFFECT OF PERCEIVED ENVIRONMENTAL UNCERTAINTY ON BUDGETARY SLACK: THE PIVOTAL ROLE OF SEQUENTIAL ROLE AMBIGUITY AND JOB-RELATED TENSION

Jolien De Baerdemaeker () and Werner Bruggeman ()
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Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: In the empirical literature, much consideration has been given over the years to the dysfunctionalitiesof budgetary slack: budgetary slack is believed to be created to intentionally bias performance evaluations, to control for resources, and to achieve personal aspirations. In contrast to this, we examine the extent to which budgetary slack is created in response to perceived environmental uncertainty rather than as a way of intentionally biasing performance evaluations. In particular, building on information processing and role theory, we argue that perceived environmental uncertainty is both directly and indirectly through the sequential mediation of role ambiguity and job related tension related to budgetary slack. Using quantitative survey data, we find that budgetary slack is positively related to the job related tension caused by uncertainty driven role ambiguity. As the effect of job related tension on budgetary slack overrides the explanatory potential of traditionally recognized antecedents such as budget participation, information asymmetry and superior’s ability to detect slack, our results hig hlight the importance of psychological variables to fully understand the budgetary slack process.

Keywords: budgetary slack; environmental uncertainty; role ambiguity; job-related tension; tolerance for ambiguity (search for similar items in EconPapers)
Pages: 2 pages
Date: 2015-06
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:15/907

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