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Budget Decision Making, Factors that influence budget decision making:…
Budget Decision Making
Contingency Theory: The results are contingent on decisions made
External Antecedents
Social Pressure: Consists of 3 segments (Altenburger, 2017)(Davis, 2006)
Obedience Pressure: Respond to direction regardless of policy
Perceived Pressure Strength - Power Distance
Pressure Stimulus (x): pressure to make less then optimal decision
Stress Response (y): Whom do they hold responsible for their decisions?
Strain Outcome (z) - Consequence: Creation of Budget Slack or another less then optimal decision
Peer Pressure: influenced by peers
Compliance Pressure: Respond to policy regardless of environment
Environmental Uncertainty (Dunk, 1998)
Information Asymmetry: Information necessary to decision is withheld from either agent or principal (Agency Theory)(Dunk, 1998)
Risk Tolerance (Organization): More likely to pad budgets to meet emerging needs and goals (Dunk, 1998)
Governance Structure: Lack of MGMT Controls/Internal Controls (Lukka, 1988)
Task Uncertainty
Individual Characteristics
Organizational Commitment: (Myers, Allen) Affect, Normative, Continuance
Impression Management: Reputation, Formal Rewards/Evaluation
Response
Role Stress: Role Conflict/Role Ambiguity
Factors that influence budget decision making: Literature Review