BUDGETARY PARTICIPATION: HOW IT AFFECTS PERFORMANCE AND COMMITMENT

Abstract

The Malaysian public sector has undergone a number of reforms in the past two decades. They have focused on decentralization to improve performance and participative decision-making. A Modified Budgeting System (MBS) was adopted to encourage more participation from employees. Previous researchers report that budgetary participation can lead to certain behaviours such as employees’ positive attitude and performance. This study examines the role of organizational commitment and budgetary participation on managerial performance. We distributed questionnaires to middle level managers involved in the budget process of a government ministry to identify their budgetary participation level and the impact on managerial performance. The findings reveal that budgetary participation has a significant effect on managerial performance by enhancing organizational commitment. Overall, the study findings provide a better understanding of the effects of budgetary participation in the public sector, allowing governments to improve organizational commitment among employees and refine budgetary processes so more employees can participate. Most of the studies on budgetary participation has been conducted in the private sector rather than the public sector even in developing countries. This study attempts to fill up the gap. In addition, this study relies on participative decision-making approach to examine the relationship between budgetary participation and managerial performance.

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