The effect of frontline employee participation in strategic planning on managers’ budget slack creation and evaluation: a lab-in-the-field experiment

• Yasheng Chen ^[1] ; James Xede ^[1]
  1. [1] Xiamen University

     Xiamen University

     China

     
• Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 52, Nº 4, 2023, págs. 528-558
• Idioma: inglés
• DOI: 10.1080/02102412.2022.2109840
• Texto completo no disponible (Saber más ...)
• Resumen

  • We examined whether participation of frontline employees (FEs) in a firm’s strategic planning using strengths, weaknesses, opportunities, and threats (SWOT) analysis mitigates managers’ budget slack creation and whether it improves budget evaluation. Using a lab-in-the-field experiment in an agro-processing firm in Ghana, we found that FE participation in strategic planning enhanced managers’ identification of the number of internal and external factors affecting the firm, enabling the firm to better understand the environment in which the budget process is undertaken. We also found that FE participation reduced managers’ budget slack creation and bias in their performance evaluation. In an additional analysis, we found that FE participation improved managers’ budget allocation, effectively redirecting the firm’s resources to units where they were most needed. Overall, the results showed that FE participation in strategic planning improved the managers’ information environment, thereby positively influencing their choices and actions.

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