The Influence of Organisational Commitment on the Use of Financial Measures for Performance Evaluation

Abstract

Prior studies on the interactive effects of performance evaluative style and budgetary participation on managers' budgetary performance have overlooked several important issues. First, the moderating effects of organisational commitment have largely been overlooked. Since managers, who are highly committed to their organisations, are likely to pursue their organizations' goals much more intensely than managers who are not committed to their organisations, the effects of performance evaluative style and budgetary participation on the budgetary performance of these two groups of managers are likely to differ. Second, prior studies in this research area have concentrated mainly on the manufacturing sector. The services sectors have received relatively little attention. Third, differences between privately owned service organisations and publicly funded service organisations and their effects on performance have also not been considered. To address these gaps in the literature, this study investigates the three‐way interaction between reliance on financial measures for performance evaluation, budgetary participation and organisational commitment affecting budgetary performance in the health services sector. Based on a sample of 170 managers, the results indicate that highly committed managers react very differently to reliance on financial measures for performance evaluation and budgetary participation from lowly committed managers. Differences were also found between managers from the privately funded service organisations and those from the publicly funded service organisations.

Citation

Lau, C.M. and Ng, J. (2003), "The Influence of Organisational Commitment on the Use of Financial Measures for Performance Evaluation", Pacific Accounting Review, Vol. 15 No. 1, pp. 17-48. https://doi.org/10.1108/eb037970