TRUST IN SUPERIORS AND DYSFUNCTIONAL BEHAVIORS : AN EXPERIMENTAL STUDY ON BUDGETARY SLACK

María Gilabert-Carreras, David Naranjo-Gil, Susana Gago

DOI: http://dx.doi.org/10.12775/JPM.2014.006

Abstract


Purpose: This paper analyzes trust in superiors as an informal control mechanism to reduce budgetary slack. We examine how relationships between trust of subordinates in their superiors and economic incentive reduce the tendency of subordinates to create budgetary slack.

Methodology: An experiment was designed with participants who play the role of manager or executive alternatively

Findings: Results show that the introduction of an economic incentive does not affect the relationship between trust and budgetary slack.

Implications/limitations: This study will let organizations to further the budgeting process by using informal mechanism, such as trust, as a complement to traditional mechanism (e.g. monetary/ economic incentives). This enhances the effectiveness of the organization’s actions and policies.

 Originality/Value: The findings of this study complement the results of previous studies on how trust is related to financial and non-financial performance criteria.


Keywords


Budgetary slack; Trust; Subordinates vs. Superiors; Economic vs non-economic incentives

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References


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