The Effect of Congruence between Cultural Time Orientation and Budget Planning Horizon on Employees' Satisfaction with Participative Budgeting

Abstract

The purpose of the current study is to examine how employees from different cultures respond to participative budgeting when the budget planning horizon is congruent or incongruent with their cultural time orientation. We conducted a 2×2 quasi-experiment in which cultural time orientation (short term or long term) was measured and budget planning horizon (short term or long term) was manipulated. A total of 164 employees participated in the experiment – 87 from China and 77 from the United States, representing long-term and short-term cultural time orientations, respectively. The results indicate that satisfaction with participative budgeting was greater when cultural time orientation and budget planning horizon were congruent, relative to incongruent. Also, the differential reaction between congruence and incongruence was less extreme for the Chinese participants than the U.S. participants, which is consistent with Confucian thought of “The Doctrine of the Mean.” The results of this study contribute to participative budgeting literature and suggest that managers who operate in different countries should be cognizant of cultural differences when employing participative budgeting processes.

Citation

Wang, Z. and Hunton, J.E. (2011), "The Effect of Congruence between Cultural Time Orientation and Budget Planning Horizon on Employees' Satisfaction with Participative Budgeting", Arnold, V., Bobek, D., Clinton, B.D., Lillis, A., Roberts, R., Wolfe, C. and Wright, S. (Ed.) Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 14), Emerald Group Publishing Limited, Leeds, pp. 91-116. https://doi.org/10.1108/S1475-1488(2011)0000014007