The Role of Budgetary Control on Managerial Performance in Fertilizer Companies in Indonesia

Abstract

Objective – This study aims to examine the influence of budgetary control on managerial performance of fertilizer companies in Indonesia with the characteristics of budgetary goal and knowledge of cost management as moderating variables. Design/methodology – This study uses 144 samples of respondents from middle to upper level managers in the fertilizer industry, i.e. subsidiaries of Pupuk Indonesia. Data collection is carried out by utilizing survey questionnaires. Data analysis is performed using Moderating Regression Analysis (MRA). Results – The findings indicate that budgetary control, characteristics of budgetary goal and knowledge of cost management influence managerial performance. Furthermore, characteristics of budgetary goal and knowledge of cost management was found to moderate the influence of budgetary control on managerial performance. Research limitations/implications – This study is only limited to the companies that are engaged in the fertilizer industry, hence its results cannot be used for the purpose of generalization. Apart from that, the characteristics of budgetary goals and knowledge of cost management variables in this study are only quasi moderator variables.

The Effect of Budget Participation on Managerial Performance With Cost Management Knowledge as a Moderated Variables

“…The second possibility is that the variable cost management knowledge interacts with managerial performance variables as independent variables. This research is in line with the research conducted by Hasan (2018), which states that knowledge of cost management is used so that a manager can predict for the short and long term. Namely, by reducing the costs that the company will issue through streamlining necessary things and making goods that have no economic value become goods with economic value.…”

“…Both are significant; it can be said that it is quasi moderation. Quasi moderation is a moderating variable that interacts with independent variables and becomes an independent variable (Hasan, 2018).…”

The effect of organizational commitment and Cost management knowledge on the relationship between budget participation and managerial performance

“…Santos et al (2014) and Savitri et al (2015) also use CMK as a moderating variable and found similar results. Hasan et al (2018) also show that CMK can moderate the relationship of budget control which includes budget participation on managerial performance.…”

“…The resulting budget decision will be better with more accurate information. Otherwise, without CMK in budgeting processes lead to less accurate decision making (Hasan et al, 2018).…”

“…(Agbejule & Saarikoski, 2006). CMK is useful for managers in budget preparation to control inefficient costs (Hasan et al, 2018). So, the resulting budget expected to be more accurate.…”