Employee Participation in Budgeting

influence budget participation because both variables are related to organizational commitment through perceived justice.

According to Nguyen Thi Thanh Dinh (2017), budget participation is a way to demonstrate fairness in the organization, increasing employee confidence in the fairness of the budgeting process because employees have the opportunity to give their opinions, which means they are always respected in the workplace, they are considered important members of the organization. When employees receive encouragement and motivation to participate in the budget from their superiors, they will have more trust and higher commitment to the organization.

From the above analysis, it can be seen that leadership style has an impact on budgeting of units.

Hypothesis H1: Leadership style has a positive impact on budget planning at the units of the State Reserve Department in the Southeast region.

2.4.2 Application of information technology in budgeting

Accounting is a system used to record, classify and summarize business activities through reports (Meigs, 1996). The role of maintaining financial information and ongoing analysis necessary to provide management and external interests with facts necessary for decision making, is also considered (Grigg, 1988).

Financial accounting systems ensure that the assets and liabilities of a business are properly accounted for and provide information about revenues, profits, etc. to shareholders and other stakeholders. In contrast, management accounting systems provide information to managers within the organization to support their decision making (Ryan et al., 2002). According to the above analysis, budget estimates are prepared based on the existing accounting documents of the unit. However, Horngren (2002) argues that budgeting focuses on an upcoming accounting period, not on the past period, where accounting relies on past information to prepare reports, and budgeting focuses more on the purpose of forecasting to estimate what is likely to happen in the future and how to allocate organizational resources to carry out future activities. The reasons

The above discussion partly explains the relationship between accounting and budgeting.

Diamond & Khemani (2006) conducted a study on accounting systems among enterprises in developing countries in Africa, and found that the implementation of accounting processes manually or supported by old and unmaintained software and hardware applications negatively affected the budgeting of enterprises. The authors explained that such accounting processes would result in a lack of reliable and timely revenue, cost data and indicators for budget planning, monitoring, controlling expenditures and poor quality accounting reports, thereby negatively affecting budgeting.

From the above analysis, it can be seen that the application of information technology in budgeting has an impact on the budgeting of units.

Hypothesis H2: The application of information technology in budgeting has a positive impact on budgeting at the units of the State Reserve Department in the Southeast region.

2.4.3 Budgeting process

According to Raghunandan et al. (2012) the budgeting process involves coordination, cooperation and communication between different units in the organization. The budget shows how these units are related to each other in their operations, allowing the creation of bridges between organizational units. Because budgeting starts from individual units, from cost centers and cost users, etc., it is necessary to gather all the data and information needed for budgeting from the units in the organization, thereby directly affecting the effectiveness of budgeting. Ekeocha (2012) defines the budgeting process as a system of rules that govern the decision making leading to the budget, from its formulation, through approval, to implementation and evaluation.

The research results of Zweni, AG (2017) on the budgeting process related to the budgeting process sets goals for the units of the unit, the budgeting process is done from bottom up, using

performance metrics to measure budget effectiveness, and each employee is responsible for budgeting within the scope of their work that affects the organization's budget.

Okpala (2014) asserted that the lack of linkage between the budgeting process and organizational policies, planning and budgeting can be a factor leading to poor budgeting results, budgeting and implementation are far apart, thereby negatively affecting the achievement of organizational goals.

The above analysis shows that the budgeting process affects the budgeting of units.

Hypothesis H3: The budget planning process has a positive impact on budget planning at the units of the State Reserve Department in the Southeast region.

2.4.4 Level of employee participation in budgeting

According to Beatrice Njeru Warue and Thuo Vivian Wanjira (2013), employee participation in the budgeting process is more accepted in large enterprises, while small enterprises have limited employee participation in budgeting. McLaney & Atrill (1999) argue that the role of the budget as a plan of what is to come and a standard for measuring actual performance depends largely on how the objectives in the budget are implemented and quantified, so employee participation plays a role in linking those objectives to the reality at the unit. That is, when implementing budgets, members of the organization should be involved in clearly defining budget targets. Members should also participate in subsequent estimates of these targets with management (Chalos & Poon, 2000).

When budget variances occur, participation and discussion among different levels of management will facilitate and contribute to accurately identifying the location of the variances, thereby taking corresponding corrective actions. Poon (2001) found that employee participation in budgeting will help managers

Managers can exchange information and ideas to plan budgets and control budget implementation more effectively. Nouri & Parker (1998) also argued that the level of budget participation facilitates information sharing between subordinates and superiors, and between superiors and subordinates in budget participation, contributing to information sharing in both directions.

Regarding information sharing during the budgeting process, Magner et al. (1996) suggested that subordinates would have more information from superiors and others regarding their tasks, responsibilities, and expected performance, which would increase their performance. Chell & Brownell (1988) suggested that discussions with superiors during the budgeting process also helped clarify subordinates’ goals and performance methods. Thus, the findings of these researchers suggest that employee participation in the budgeting process contributes to increased budget accuracy.

The above analysis shows that the level of participation of employees in budget estimates affects the budget estimates of units.

Hypothesis H4: The level of employees' participation in budget estimates has a positive impact on budget estimates at the units of the State Reserve Department in the Southeast region.

2.4.5 Scale

According to Merchant (1981), for enterprise size, budgeting studies always compare the use of budgeting processes in larger units with those in smaller units, differences in enterprise-level budgeting systems, and the variety and degree of decentralization of budgeting.

Merchant (1981) found that larger organizations tend to use more complex budgeting systems, while smaller organizations are less likely to use budgeting. Joshi et al. (2003) found that unit size, as measured by unit growth, contributes to a more comprehensive implementation of the budgeting process to achieve better performance. Furthermore, unit size and complexity of activities in the budgeting process

The operating process often affects the nature of the budget, in which a detailed and complete budgeting system plays an important role in helping the unit succeed.

The above analysis shows that the size of the organization affects the budgeting work of the units.

Hypothesis H5: The scale of impact has the same direction on budget estimation at the units of the State Reserve Department in the Southeast region.

2.5 Proposed research model

To propose a research model of factors affecting budget estimation at units of the State Reserve Department in the Southeast region, the author mainly relies on the results of previous studies related to the topic, and background theories to explain which factors can affect budget estimation at units of the State Reserve Department in the Southeast region. Specifically:

+ With the leadership style factor: inherited from the research results of author Nguyen Thi Thanh Dinh (2018) and leadership style theory.

+ With the factor of Information Technology Application in budgeting: inherited from the research results of authors Beatrice Njeru Warue and Thuo Vivian Wanjira (2013).

+ With the budgeting process factor: inherited from the research results of author Zweni, AG (2017).

+ With the factor of employees' participation in budget estimates: inheriting the research results of author Nguyen Thi Thanh Dinh (2018) and the theory of equity in organizations.

+ With the scale factor: inherited from the research results of author Kenneth A. Merchant (1981)

Table 2.1: Basis for building the proposed research model

STT

Factor

Proposal basis

Leadership style

Nguyen Thi Thanh Dinh (2018)

Application of information technology in

estimate

Beatrice Njeru Warue and Thuo

Vivian Wanjira (2013).

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Budgeting process

Zweni, AG (2017)

Level of budget participation

of workers

Nguyen Thi Thanh Dinh (2018)

Scale

Kenneth A. Merchant (1981)

(Source: Author's synthesis)

The proposed research model is shown as follows:

Leadership style

Application of information technology

in budgeting

Budgeting process

Level of employee participation in budgeting

Budgeting at State Reserve Department units in the Southeast region

Set

Scale

Figure 2.5: Proposed research model

Source: Author's synthesis)

CONCLUSION OF CHAPTER 2

Chapter 2 presents the contents related to the theoretical basis of budgeting including: Concept; classification; role, function; budgeting process and budgeting models. Next, the author presents the basic theories to explain the factors affecting budgeting such as: leadership style theory; agency theory; psychological theory; organizational justice theory. At the end of the chapter, the author presents the factors affecting budgeting in units and builds a proposed research model, according to which the factors affecting budgeting in SNCL units include: Leadership style; Application of information technology in budgeting; budgeting process; Level of participation in budgeting of employees and scale.

CHAPTER 3: RESEARCH METHODOLOGY

Chapter 2 presented the theoretical basis and the proposed research model. Continuing with the introduction of the theoretical basis, Chapter 3 will present the research method used to evaluate the scales, research concepts, test the research model and proposed hypotheses. Chapter 3 consists of 4 parts: (1) research design, (2) scale construction, (3) preliminary evaluation of the scale,

(4) conduct quantitative research.

3.1 Research design

3.1.1 Research process

Research problem

Research objectives

Previous studies; theoretical basis

Theory and background theory

Proposed research model

Research methods

Qualitative research: Discuss with experts the factors and scales for the variables in the research model.

Quantitative research: Using SPSS 22.0 software in data processing and analysis

+ Test the reliability of the scale with Cronbach's Alpha coefficient;