Budgeting_Games_People_Play

THE ACCOUNTING REVIEW Vol. LXII, No. 1 January 1987 The Budgeting Games People Play Frank Collins, Paul Munter, and Don W. Finn ABSTRACT: Managers would likely have different ways, termed games, of coping with their superior's budgetary leadership style and the interpersonal stress associated with budgeting. Additionally, these factors are likely to be associated with different budgetary attitudes. We examined the patterns of gameplay as well as leadership styles and role stress to determine whether these factors were correlated with the subordinates' attitude toward achieving their budget. We found that the game patterns of DEVIOUS, ECONOMIC, INCREMENTAL, and TIME were correlated with subordinates' attitude toward achieving their budgets, particularly when considered in the context of their superior's leadership style and the amount of role stress present. In particular, we found that a manager with a positive budgetary attitude used the ECONOMIC, INCREMENTAL, or TIME game pattern, avoided the DEVIOUS pattern, had low role stress, and had a superior with a punitive leadership style. G A E L Y in budgeting is a relaMPA tively unexplored issue. Since Hofstede's [1967] initial work, there has been little published research on that aspect of budgeting. Additionally, there has been limited work in a budgeting context concerning leadership and role stress. While Collins [1982] suggests a role theory perspective for investigating the effects of leadership styles, no comprehensive, accepted theory regarding budgeting processes exists [Hofstede, 1967; Hopwood, 1972]. This paper examines the effect of game-play, leadership style, and role stress on attitude towards achieving one's budget. Previous research has shown that gameplay exists in a budgetary setting and that there are speciHc patterns or schemata of gameplay [Collins, Munter, and Finn, 1983]. In this study, we explore whether a relationship exists among leadership styles, gameplay, and budgetary attitude and the possible nature of that relationship. Additionally, we determine the extent to which role stress enters into that relationship. We first present the research model underlying our study. Next, we discuss our experimental variables, measurement constructs, and associated research questions and hypotheses. Finally, we provide the research method, results, and concluding remarks. RESEARCH MODEL Our theoretical model is outlined in Figure 1. Gameplay is depicted as an intervening variable in the leadership We particularly appreciate the assistance of Donna Sarchet, Abraham Research Fellow, and that of the Planning Executives Institute and the National Management Association as well as the advice of Professors Don Clancy, Steve Hora, and Shelby Hunt. Frank Collins is Arthur Andersen Professor of Accounting, Paul Munter is Professor of Accounting, and Don W, Finn is Associate Professor of Accounting, all at Texas Tech University, Manuscript received February 1983. Revisions received September 1983, May 1984, January 1985. Accepted February 1985. 29 30 FIGURE 1 The Accounting Review, January 1987 THEORETICAL MODEL OF RELATIONSHIPS AMONG LEADERSHIP, GAMES, STRESS, AND ATTITUDE IN A BUDGETARY SETTING LEADERSHIP STYLES— 1. Positive 2. Advancement 3. Punitive BUDGET GAMES(PATTERNS) BUDGETARY t ATTITUDE ROLE STRESS Style-budgetary attitude chain while role stress is shown as a moderating variable. * We depict leadership style as an independent variable because leadership styles are used by superiors to induce desirable subordinate budgeting behaviors [Katz and Kahn, 1978; Hunt and Larsen, 1974]. Further, budget game patterns are hypothesized to be intervening variables between leadership style and budgetary attitude because a subordinate is placed between the superior*s leadership style and the necessity to perform under the budget. Thus, the subordinate would involve himself in certain coping procedures or games to relieve the attendant behavioral pressure [Berne, 1964; Abelson, 1981]. Role stress is specified as a moderating variable because stress may change (or moderate) the effect of leadership and gameplay on attitudes. EXPERIMENTAL VARIABLES their budgets is the dependent variable. This is clearly a second order, end-result variable (compared to others such as profitability, cost savings, etc.). However, it was chosen because many other factors that are largely external (weather, strikes, competitor actions, material or product shortages, general economic conditions, etc.) potentially can affect the ultimate end-result variables. Additionally, other researchers [Mirvis and Lawler, 1977; Milani, 1975; Macy and Mirvis, 1982] have found significant relationships between attitudinal variables and ultimate end-result measures. ' We note that while the issue is not entirely settled, a growing number of researchers have found evidence that attitude leads to behavior (see Sears, Speer, and Hensler [1979]; Crosby, Bromley, and Saxe [1980]; Fazio and Zanna [1978]; and Regan and Fazio [1977]). Further, the general thrust of the leadership literature (see Hodgets and Altman [1979]) is that leadership is intended to and does cause behavior. Thus, consistent with these researchers, we posited that the primary theoretical path is from leadership to games to behavior, although we acknowledge the possibility of a secondary flow (behavior to games to leadership). For this reason, we make only correlational, not causal, claims. Budget Attitude The self-reported attitude of line managers (subordinates) toward achieving Collins, Munter, and Finn Leadership Styles To measure leadership style, we use the contingency approach to leadership developed by Johnson [1970] and also used by Reitz [1971] and Sims [1977].' In this model a leader (or superior) uses a combination of three basic leadership styles: (1) a positive style that encourages "good" performance by offering encouragement, praise, and other forms of support; (2) a style that offers advancement opportunities to those who perform well; and (3) SL punitive style that punishes "bad" performance with reprimands, pay cuts, and threats of termination. Within the model, a leader may use either one style or a combination of styles (although one style would probably dominate). Further, the model assumes that leaders/superiors apply styles contingent upon past performance of their followers /subordinates, hence the contingency nature of this approach. Our first null hypothesis to be tested empirically is: HOi There is no relationship between leadership styles and budgetary attitude. Since standard theories of leadership imply attitudinal and behavioral effects on subordinates, one might expect a link between leadership style and budgetary attitude [Katz and Kahn, 1978; Hunt and Larsen, 1974]. If a relationship is established between leadership style and budgetary attitude, the next link in our model can be investigated—the significance of gameplay as an intervening variable. Gameplay Huizinga [1950], a cultural historian, concludes that much human activity consists of "games." He defines games as organized play involving set rules and specific objectives. More recently Berne, a clinical psychologist, defmes games 31 as "an ongoing series of complementary ulterior transactions (between people) leading to a well-defined outcome" [1964, p. 48]. According to Berne, individuals do not begin each transaction with a "clean slate." Rather, in repetitive situations (such as budgeting) individuals develop a repertoire of potentially useful behaviors [Abelson, 1981]. Indeed, Berne notes that personality development is primarily a matter of learning which games to play in specific situations. Similsirly, Goffman [1967] asserts that individuals develop ritualistic behavior patterns for use in repetitive face-to-face interactions. These behavior patterns fit within the definitions of games offered by Huizinga and Berne. ^ Tovey [1963], Fuyuume [1965], and Hofstede [1967] find industrial budgeting to have a gameUke nature, and Wildavsky [1974, 1975] provides evidence of gameplay in congressional budgeting. We define games as routinized behaviors adopted by subordinates to cope with pressures inherent in the budgetary negotiation process. Collins et al. [1983] and Collins, Munter, and Clancy [1984] showed that gameplay exists in a budgetary setting and that there are different repertoires or patterns of gameplay." Appendix A summarizes how the following four gameplay patterns were identified using questions developed by Collins et al. [1983]: ' For an excellent discussion of the various leadership approaches, see Hodgets and Altman [1979] or Hunt and Osborn [1981]. * Early researchers in this area include Piaget [1926], Bartlet [1932], and Goffman [1959]. More recent works include those of Abelson [1981], Cantor and Mischel [1979], Mandler [1978], and Markus [1977]. * We assume that each individual might possess a repertoire of several games for dealing with the budgetary process. A repertoire would give the individual a choice of approaches. Further, the repertoire of games would be logically consistent since a subordinate's behavior would likely have a measure of consistency. We would refer to the game cluster as a gameplay pattern. 32 The Accounting Review, January 1987 role ambiguity constitute a measure of role stress.' Even if role stress exists, it might be unrelated to budget gaming, and thus, we have our final null hypothesis: HO3 Role stress does not act as a significant moderating variable in the leadership style-budgetary gameplay-budgetary attitude relationship. RESEARCH METHOD DEVIOUS, ECONOMIC, INCREMENTAL, and TIME. We next investigated the significance of gameplay as an intervening variable in the relationship of leadership style to budgetary attitude. Of course, budgetary gameplay could exist and yet have no bearing on leadership/attitude relationships in the budgeting process. If this were true, gameplay would be an expression of personal style rather than an explanation of budgetary attitude. Thus, we have a second null hypothesis: HO2 Gameplay patterns, as intervening variables, will not improve the association between leadership styles and budgetary attitude. If gameplay acts as an intervening variable, then gameplay patterns should help explain a subordinate's behavioral reaction (as measured by budgetary attitude) to a superior's leadership style. Role Stress Interpersonal role stress affects the effectiveness and efficiency of relations [Van Sell, Brief, and Schuler, 1981]. According to role theory, people in organizations associate "roles" or behavioral expectations with functional positions [Katz and Kahn, 1978]. These expectations are held by both the subject person and others in the organization. For example, managers are often expected to enact a "superior" role where their behaviors are friendly but demanding, knowledgeable, and decisive. Role stress, the amount of interpersonal strain in role relationships, is commonly described in terms of role ambiguity and role conflict [Kahn et al., 1964]. Role ambiguity measures uncertainty among relevant actors regarding the "proper" role while role conflict measures disagreement. Together, role conflict and Based on the results of a case study and an expert panel [Collins et al., 1983], we prepared a questionnaire regarding demographic data,** budgetary attitude, leadership styles, budget games, and role stress. The questionnaire was reviewed for meaningfulness and understandability by the controllers and budgeting staff of a multinational energy company. This firm was chosen due to its operational diversity and strong commitment to budgetary processes. Next, we mailed questionnaires to members of the Planning Executives Institute and the National Management Association. Responses were received from 1,021 planning executives and 318 managers (response rates of 30 percent and 24 percent, respectively).' * In this study we chose not to decompose role stress into the two dimensions of conflict and ambig\iity for two reasons. First, some researchers (see Bellenger, Chonko, and Howell [1982]) suggest that this decomposition may not be supportable. Second, our focus is on gameplay and parsimony urged us to analyze only the combined variable. • The average manager responding to our survey was 48 years old, had a college education, was male, had been with his organization for 17 years (eight years at present level), and was a mid-level manager in an organization of 20,432 employees. These demographic characteristics are representative of the "typical" member of the organization we used to develop our mailing list. ^ Since the questionnaire was anonymous, it was not possible to directly evaluate the effects of nonresponse bias. However, statistical tests indicated that the demographic characteristics of the respondents and the demographic profiles of the P.E.I, and N.M. A. memberships Collins, Munter, and Finn TABLE 1 QUESTIONNAIRE ITEMS FOR OVERALL BUDGETARY ATTITUDE 33 Questionnaire Items 1. I frequently make a sincere personal effort to achieve my budgetary objectives. A verage Response* 5.86 3.28 4.73 4.67 Standard Deviation 1.17 1.71 1.67 1.38 2.** I never get what I want in my budget. 3. I often receive recognition for achieving budget goals. 4.** I frequently allow erroneous or incompatible data to be put into the budget process even though this may hamper budget administration. 5. 6. 7. My budget requests are often approved. I often exceed my approved budget objectives. I frequently feel a personal sense of failure when budget objectives are not met. 5.31 3.81 4.02 4.38 5.44 4.87 1.27 1.67 1.70 1.48 1.57 1.60 8.** I frequently withhold my full support of the budget. 9. My boss believes budgeting is very important. Average • 1 = strongly disagree, 7 = strongly agree. •• Questions were reverse scored for analysis. Measurement of Research Variables Budgetary attitude was measured with questions developed by Collins [1978]. Table 1 shows the questions (and the average and standard deviations of responses) that were asked of each subordinate.* Subordinates are considered to have a positive attitude if they strive to meet or exceed their budget, ego-identify with their budget, or strive to induce other subordinates to achieve their budgets. They are considered to have a negative attitude when they withhold support of the budget, do not strive to induce other subordinates to achieve their budgets, or attempt to sabotage the budget or budget process. Respondents used a seven-point Likert scale, where one = strongly disagree and seven=strongly agree. The nine responses for the individual were averaged to yield a measure of "Overall Budgetary Attitude" for each individual. This variable was the dependent variable in the subsequent regression analyses. Table 2 shows the questions used to measure leadership styles and the average responses and standard deviations. Based upon the work of Johnson [1970], we developed three leadership style variables: positive, advancement, and punitive. The leadership style variables are computed by averaging the individual's responses (on a seven-point Likert scale) to the questions shown in Table 2. The three leadership style variables were independent variables in the regression models. (the latter demographics were obtained from organization records) were comparable. Also, see footnote 13 and related discussion. ' The actual questionnaire presented these questions as well as those in Tables 2-4 in random order. 34 TABLE 2 The Accounting Review, January 1987 QUESTIONNAIRE ITEMS FOR LEADERSHIP Questionnaire Items Positive Leadership Style: 1. My boss would personally pay me a compliment if I did outstanding work in preparing my budget. 2. My boss would lend a sympathetic ear if I had a complaint about my budget. 3. My boss would give me special recognition if my work performance in preparing my budget was especially good. 4. My boss would show a great deal of interest if I suggested a new and better way of preparing the budget. 5. My boss would do all he/she could to help me if I were having problems in preparing my budget. Average Advancement Leadership Style: 1. My boss would see that I will eventually progress as far as I would like to in this organization if my work in preparing my budget is consistently above average. 2. My boss would recommend that I be promoted if my work in preparing my budget was better than others who were otherwise equally qualified. 3. My boss would tell his/her boss if my work in preparing my budget was outstanding. 4. My boss would recommend that I not be promoted to a higher job level if my performance in preparing my budget was only average. Average Punitive Leadership Style: 1. My boss would reprimand me (written or verbally) if my work in preparing my budget was consistently below acceptable standards. 2. My boss would criticize me if my work in preparing my budget was not as good as the work of others at my level. 3. My boss would recommend against a pay increase for me if my work in preparing a budget was substandard. Average * 1 = strongly disagree, 7 = strongly agree. A verage Response* Standard Deviation 5.19 1.53 1.51 1.66 1.71 1.67 1.61 4.76 4.01 4.73 4.86 4.61 3.48 1.72 3.61 1.63 4.17 3.65 3,72 1.83 1.62 1.69 4.99 4.62 4.02 4.54 1.71 1.59 1.82 1,77 Gameplay variables were developed for this study based upon the responses to the 13 questions in Table 3. Based upon the work of Collins et al. [1983], four games were identified (see Appendix A). The DEVIOUS gameplay pattern is determined by averaging the individual's responses (on a seven-point Likert scale) to questions 1-7, the ECONOMIC pattern by the responses to 8-11, the TIME pattern by 12-13, and the INCREMENTAL pattern by 1-2. Collins, Munter, and Finn TABLE 3 QUESTIONNAIRB ITEMS FOR G A M E S 35 Questionnaire Items* DEVIOUS game pattern: 1. I try hard to keep what I had in last year's (period's) budget. 2. I get changes in my budget by seeking incremental changes over past budgets. 3. I rely on friendship with my boss to get what I want in my budget. 4. I ask for a small item in the budget knowing that I can ask for a lot more next time once it's in the budget. 5. I get what I want in my budget by letting my boss think my operation has a crisis and must have the budgetary request. 6. I place some items in my budgetary request which I know will not be approved so that those requests will be cut instead of items I really want approved. 7. I attach items that are likely to be cut from the budget if separately submitted to other projects that are certain to be approved. Average ECONOMIC game pattern: 8. I invite my boss to my work area so that he can see what I really need in my budget. 9. If my boss won't give me what I want in my budget, I tell him: "We'll simply have to shut down. Unless we get the full budget amount, we just can't operate . . ." or something like that. 10. I get what I want in my budget by presenting my boss with the facts. 11. I get what I want in my budget by telling my boss that my requests will pay for themselves. Average TIME game pattern: 12. I seek the help of others (other than my boss) to get what I want in my budget. 13. If times aren't "right," I'll wait until the next budget period to ask for things in my budget. ^Average Name of Behavior** Average Response^ Standard Deviation Horatio at the bridge Incremental Relying on friendship Camel's nose 4.40 4.49 2.33 2.62 1.79 1.70 1.42 1.56 Crisis 2.30 1.28 Sacrificial Iamb 2.91 1.81 Piggyback 2.64 1.60 3.09 1.40 On-site visits All or nothing 4.29 2.33 1.91 1.47 Presentmg the facts It'll pay for itself 5.57 4.78 4.23 1.31 1.60 1.30 Seeking other's help (or end run) Right time 4.13 4.38 4.26 1.82 1.71 1.65 36 TABLE The Accounting Review, January 1987 3—Continued INCREMENTAL game pattern: 1. I try hard to keep what I had in last year's (period's) budget. 2. I get changes in my budget by seeking incremental changes over past budgets. Average Horatio at the bridge Incremental 4.40 4.49 4.44 1.79 1.70 1.92 • 1 = strongly disagree, 7= strongly agree. ** The use of phrases such as "Horatio at the bridge' is only for ease of reference to the behavior patterns. It is hoped that the reader will find these terms descriptive of the behavior pattern and find these abbreviated references helpful in subsequent discussions. t The gameplay patterns are determined by taking the average response from the questions, such that the DEVIOUS pattern is based upon the responses to games 1-7; the ECONOMIC pattern is based on responses to games 8-11; the INCREMENTAL pattern is based on games 1 and 2; and the TIME pattern is based on games 12 and 13. t The INCREMENTAL game uses questions 1 and 2 that were also part of the DEVIOUS game. Role stress was based upon the work of Rizzo et al. [1970] and was measured by averaging the individual's responses to the 14 questions in Table 4. This role stress variable was included in the regression model to determine whether role stress acts as a moderator in the research model. Test of Intervening and Moderating Relationships To determine whether the gameplay patterns are intervening variables, we use path analysis as described by Reise [1974]. This test displays the structure of the relationship among the variables and will identify the leadership to gameplay to budgetary attitude relationship. We next test whether role stress is a moderator variable. A moderator variable is said to exist if the form of the relationship between an independent variable, Xy and the dependent variable, y, is changed by the introduction of the new variable, z. To determine whether role stress is a moderator variable, we determine whether there is a significant interactive effect with the other independent variables. Computationally, we compute the following regression equation: The new independent variable (z) is seiid to be a moderating variable if ^3^0. RESULTS To test hypothesis one, we computed the association between budgetary attitude and the three leadership styles via stepwise regression' (the regression statistics *° are presented in Table 5). We ' The validity of our results partially depends upon the assumptions inherent in regression analysis (multivariate normaJity, error term independence, and constant variance) being fulfilled. The chi-square test for normality, as suggested by Johnston 11972], resulted in a failure to reject the null hypothesis of nonnormality (aF Significant Independent Variables INTERCEPT DEVIOUS ECONOMIC INCREMENTAL TIME 1.108 -0.420 0.198 0.099 0.099 0.065 0.051 0.041 0.037 0.0001 0.0001 0.0157 0.0073 TABLE 7 PATH COEFFICIENTS Path Positive Leadership on Budget Attitude Punitive Leadership on Budget Attitude ECONOMIC Game on Budget Attitude DEVIOUS Game on Budget Attitude TIME Game on Budget Attitude INCREMENTAL Game on Budget Attitude Positive Leadership on ECONOMIC Game Punitive Leadership on ECONOMIC Game Positive Leadership on DEVIOUS Game Punitive Leadership on DEVIOUS Game Positive Leadership on TIME Game Punitive Leadership on TIME Game Positive Leadership on INCREMENTAL Game Punitive Leadership on INCREMENTAL Game Direct Indirect Residual -.03 Total .11 20 16 24 15 14 28 18 24 35 17 21 -.06 .03 .04 -.10 -.09 .08 .17 .20 -.24 .05 .05 .34 .16 .13 .13 .10 .17 .01 .09 .07 -.04 -.12 -.16 -.01 .02 .01 -.06 .10 .22 .09 Collins, Munter, and Finn TABLE 8 REGRESSION MODEL 41 DEPENDENT VARIABLE: BUDGET ATTITUDE INDEPENDENT VARIABLES: LEADERSHIP STYLES (POSITIVE, ADVANCE, and PUNITIVE), BUDGET GAME PATTERNS (DEVIOUS, ECONOMIC, INCREMENTAL, and TIME), and INTERACTIVE VARIABLES ADJ. /' SQUARE = 0.187 DF REGRESSION ERROR TOTAL 5 290 295 Sum of Squares 36.909 160.867 197.776 Mean Square 7.381 0.554 13.31 Prob>F 0.0001 - Value Significant Independent Variables INTERCEPT PUNITIVE DEVIOUS ECONOMIC INCREMENTAL TIME Other Independent Variables {Not Significant) POSITIVE ADVANCEMENT Interactive Variables PUNITIVE-DEVIOUS PUNITIVE-ECONOMIC PUNITIVE-INCREMENTAL PUNITIVE-TIME POSITIVE-DEVIOUS POSITIVE-ECONOMIC POSITIVE-INCREMENTAL POSITIVE-TIME AD>F 0.183 0.102 0.082 0.064 0.036 0.0019 0.0002 0.0131 0.0067 0.0526 0.276 0.270 0.1052 0.7979 0.052 0.038 0.030 0.028 0.068 0.056 0.051 0.041 0.075 0.071 0.043 0.041 0.3471 0.8808 0.3028 0.4748 0.1988 0.1144 0.1340 0.3883 0.7115 0.4093 0.1188 0.7701 42 The Accounting Review, January 1987 ships between the independent variables and attitude. A subordinate who uses the DEVIOUS game pattern is most likely to have a negative budgetary attitude. Not surprisingly, a high amount of role stress is associated with a reduced budgetary attitude. Most surprisingly, the punitive leadership style was ranked the most important in providing for a positive budgetary attitude. To provide additional insights into our experimental relationships. Spearman correlation coefficients were computed for the experimental variables used in the regression analyses. The coefficients appear in Table 10. The coefficients reveal a number of significant relationships. For example, role stress was positively related to both the DEVIOUS game pattern (r=.274, a