The effect of superiors' exogenous constraints on budget negotiations

Arnold, Markus Christopher (2015). The effect of superiors' exogenous constraints on budget negotiations. The Accounting Review, 90(1), pp. 31-57. American Accounting Association 10.2308/accr-50864

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In a world characterized by increasing pressure from financial and product markets, the question of how exogenous constraints affect internal coordination and control processes has become increasingly important. This experiment investigates how two exogenous constraints that superiors can face in budget negotiation settings, increased opportunity costs and financial pressure to meet unit targets, affect budget negotiations and subordinate effort. The results show that both constraints induce more cooperation, but in different ways. Financial pressure on the superior leads to more cooperative negotiation behavior by superiors and subordinates than increased opportunity costs. Specifically, subordinates do not take advantage of the superior's increased financial pressure to enforce lower budgets. After negotiation, both constraints strongly mitigate the negative effects of superior budget imposition on subordinate effort because exogenous constraints eliminate the effect of procedural fairness considerations on subordinate effort.

Item Type:	Journal Article (Original Article)
Division/Institute:	03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling > Managerial Accounting
UniBE Contributor:	Arnold, Markus Christopher
Subjects:	600 Technology > 650 Management & public relations
ISSN:	1558-7967
Publisher:	American Accounting Association
Language:	English
Submitter:	Beda Scherrer-Schweizer
Date Deposited:	16 Mar 2015 11:48
Last Modified:	05 Dec 2022 14:42
Publisher DOI:	10.2308/accr-50864
URI:	https://boris.unibe.ch/id/eprint/64648