The Role of Psychological Capital and Leader Member-Exchange on Participatory Budgeting and Managerial Performance

Abstract

<p>The competition is increasingly competitive in the world of education, particularly in this uncertain situation, it encourages every agency to plan, control, and determine the right policies. This study aims to explain the overall relationship between participatory budgeting and managerial performance by including Psychological Capital as an intervening variable and Leader Member Exchange as a moderating variable. The method used was a mixed method with a parallel convergent approach, it is conducted to produce more comprehensive facts. The method of data analysis and hypothesis testing used was Structural Equation Modeling. The survey results of 161 managerial positions in private high schools in DIY indicated that budget participation was directly related to managerial performance. Psychological capital was found to partially mediate the relationship between participatory budgeting and managerial performance. Then, the higher relationship between superiors and subordinates will increase the relationship between participatory budgeting and managerial performance. The survey results were also supported by the results of interviews with informants. This research contributes to the formation of employee of psychological capital and the implementation of leadership style as an important factor in influencing performance.</p>

Leader-Member Exchange in Educational Institutions

“…They want to volunteer for additional work, and they are willing to take responsibility. Subordinates who are close to the leader (in-group) will receive and offer a series of beneficial results, including the attention and support from the leadership, more time provided for work, willingness and awareness to provide ideas, and fewer work problems (Pradhana, 2021).…”

Effects of resilience and managerial attitudes on the relation between participative budgeting and managerial performance

“…In Brazil, there is little behavioral research on PB and MP, which underscores the relevance of the present study (Dani et al, 2017;Zonatto et al, 2019). Corroborating this finding, no studies to date have analyzed the relationship between PB and the PR variable, but previous research has addressed PB and psychological capital (Degenhart et al, 2022;Nascimento, 2017;Pradana, 2021;Schlup, 2018;Venkatesh & Blaskovich, 2012;Bangun, 2017). Furthermore, Degenhart et al (2022) In this context, based on the above-mentioned research gap, this study seeks to answer the following question:…”

“…Psychological capital, comprised of resilience and other capabilities, is considered to be a mechanism that positively relates to budgeting and performance (Venkatesh & Blaskovich, 2012). The positive mediating effect of psychological capital on the relation between PB and MP was reported in accounting research (Degenhart et al, 2022;Nascimento, 2017;Pradana, 2021;Schlup, 2018;Venkatesh & Blaskovich, 2012).…”

“…PB encourages the development of this capacity because individuals who actively help to set budgetary objectives feel prepared to overcome adversities that may occur in this process (Venkatesh & Blaskovich, 2012). Therefore, PB fosters the development of resilience in subordinates (Bangun, 2017;Pradana, 2021;Venkatesh & Blaskovich, 2012) because, by participating in this process, they increase the probability of positive results in the face of risks and uncertainties (Venkatesh & Blaskovich, 2012). Studies have found a positive influence of PB on psychological capital (Degenhart et al, 2022;Nascimento, 2017;Schlup, 2018;Venkatesh & Blaskovich, 2012), but no studies to date have analyzed the effects of PB on PR itself.…”

“…Every organization requires a management control system that ensures the achievement of organizational goals effectively and efficiently. One of the most important elements in this system is budgeting (Bangun, 2017), which is essential for the execution of business processes, as it encompasses planning, control, and decision-making (Pradana, 2021). Participative budgeting (PB) refers to the involvement of managers in setting budget goals and objectives and their influence on setting the budgets of their units (Milani, 1975;Shields & Shields, 1998).…”