Effect of Budget Participation on Managerial Performance

Oct 13, 2025 by thesweetdesigns.com 38 views

The Effect of Budget Participation and Clarity of Budget Targets on Managerial Performance with Motivation as Intervening Variables in Medan Industrial Estate

Introduction

In today's fast-paced business environment, companies are constantly seeking ways to improve their efficiency and productivity. One key area of focus is managerial performance, which is critical to the success of any organization. However, research has shown that there is a complex relationship between budget participation, clarity of budget targets, and managerial performance. This study aims to investigate the impact of budget participation and clarity of budget targets on managerial performance, with a special focus on motivation as an intervening variable. Specifically, this research was conducted on high and medium-level managers in the Medan Industrial Estate, a region known for its thriving industrial sector.

Background

The problem of consistency in the results of research related to the effect of budget participation and clarity of budget targets on managerial performance has become a concern for many academics and practitioners. Various studies have shown different results, and this inconsistency may be caused by the existence of other variables that affect the relationship. Therefore, this research tests the role of motivation as an intervening variable in the relationship between budget participation and the clarity of budget targets on managerial performance.

Methodology

This study used a questionnaire to collect data from high and medium-level managers in the Medan Industrial Estate. A total of 182 questionnaires were distributed, and 175 were successfully collected, resulting in a return rate of 96%. The data was analyzed using simple regression methods and path analysis to identify the relationships between budget participation, clarity of budget targets, motivation, and managerial performance.

Research Findings

The results of this study provide valuable insights into the relationship between budget participation, clarity of budget targets, motivation, and managerial performance. The findings can be summarized as follows:

Effect of Budget Participation on Managerial Performance

Research shows a significant influence between budget participation and managerial performance. That is, the higher the level of manager's participation in the process of budget preparation, the better the managerial performance produced. This finding suggests that involving managers in the budgeting process can lead to improved performance.

The Effect of Clarity of Budget Targets on Managerial Performance

There is also a significant effect between the clarity of the budget target and managerial performance. This shows that managers who clearly understand the established budget goals will be able to manage resources more effectively. This finding highlights the importance of clear and specific budget targets in achieving managerial performance.

Motivation as an Intervening Variable

Research found that motivation acts as a significant intervening variable in the relationship between budget participation and managerial performance. This shows that when managers feel involved in the preparation of the budget, their motivation to achieve the company's goals also increases, which has a positive impact on their performance. This finding suggests that motivation plays a crucial role in mediating the relationship between budget participation and managerial performance.

Direct Effect of Clarity of Budget Targets on Managerial Performance

This study also found that the clarity of budget targets directly affects managerial performance without being influenced by the level of motivation. This finding suggests that clear and specific budget targets can lead to improved managerial performance, regardless of the level of motivation.

Conclusion

The results of this study provide important insights for companies in the Medan Industrial Estate regarding how participation in the budget and the clarity of budget targets can improve managerial performance. In addition, finding that motivation acts as an intervening variable shows the importance of manager involvement in the budgeting process. Therefore, the company should encourage the active participation of managers in the preparation of the budget and ensure that the budget target is clearly determined to support better performance.

With a deeper understanding of the factors that influence managerial performance, companies can design more effective strategies to improve efficiency and productivity within their organizations. By involving managers in the budgeting process and ensuring clear and specific budget targets, companies can create a positive work environment that fosters motivation and improved performance.

Recommendations

Based on the findings of this study, the following recommendations are made:

Encourage active participation of managers in the budgeting process: Companies should involve managers in the preparation of the budget to increase their motivation and improve their performance.
Ensure clear and specific budget targets: Companies should establish clear and specific budget targets to ensure that managers understand what is expected of them and can manage resources effectively.
Foster a positive work environment: Companies should create a positive work environment that fosters motivation and improved performance by involving managers in the budgeting process and ensuring clear and specific budget targets.

By implementing these recommendations, companies in the Medan Industrial Estate can improve their managerial performance and achieve their goals.
Frequently Asked Questions (FAQs) about the Effect of Budget Participation and Clarity of Budget Targets on Managerial Performance

Q: What is the main focus of this study?

A: The main focus of this study is to investigate the impact of budget participation and clarity of budget targets on managerial performance, with a special focus on motivation as an intervening variable.

Q: Who were the participants in this study?

A: The participants in this study were high and medium-level managers in the Medan Industrial Estate.

Q: What method was used to collect data in this study?

A: A questionnaire was used to collect data from the participants in this study.

Q: What was the return rate of the questionnaires distributed in this study?

A: The return rate of the questionnaires distributed in this study was 96%, with 175 of the 182 questionnaires successfully collected.

Q: What were the main findings of this study?

A: The main findings of this study were:

Budget participation has a significant influence on managerial performance.
Clarity of budget targets has a significant effect on managerial performance.
Motivation acts as a significant intervening variable in the relationship between budget participation and managerial performance.
Clarity of budget targets directly affects managerial performance without being influenced by the level of motivation.

Q: What are the implications of this study for companies in the Medan Industrial Estate?

A: The implications of this study for companies in the Medan Industrial Estate are that they should encourage the active participation of managers in the budgeting process and ensure that the budget target is clearly determined to support better performance.

Q: What are the recommendations of this study for companies in the Medan Industrial Estate?

A: The recommendations of this study for companies in the Medan Industrial Estate are:

Encourage active participation of managers in the budgeting process.
Ensure clear and specific budget targets.
Foster a positive work environment that fosters motivation and improved performance.

Q: What are the limitations of this study?

A: The limitations of this study are:

The study was conducted in the Medan Industrial Estate, which may limit the generalizability of the findings to other industries or regions.
The study used a questionnaire to collect data, which may be subject to biases and limitations.

Q: What are the future research directions based on the findings of this study?

A: The future research directions based on the findings of this study are:

Investigating the impact of budget participation and clarity of budget targets on managerial performance in other industries or regions.
Examining the role of motivation as an intervening variable in the relationship between budget participation and managerial performance in other contexts.
Developing and testing interventions to improve budget participation and clarity of budget targets in companies.

Q: What are the practical implications of this study for managers and organizations?

A: The practical implications of this study for managers and organizations are:

Encouraging active participation of managers in the budgeting process can lead to improved performance.
Ensuring clear and specific budget targets can lead to improved managerial performance.
Fostering a positive work environment that fosters motivation and improved performance can lead to improved managerial performance.

By understanding the findings and implications of this study, managers and organizations can take practical steps to improve their budget participation, clarity of budget targets, and managerial performance.