Mitigating The Harmful Effect of Slack: Does Locus of Commitment (Organizational Versus Colleague) Play a Role?

• Published in: International journal of business science & applied management 2022-06, Vol.17 (3), p.1-12
• Main Author: Fanani Rohma, F.F.
• Format: Article
• Language: English
• Subjects: budgetary slack; evaluation intensity; layers of workplace theory; monitoring costs
• ISSN: 1753-0296; 1753-0296
• DOI: 10.69864/ijbsam.7-3.161

A high-level of budget proposal evaluation intensity effectively decreases slack but causes efficiency problems. A high-level budget proposal evaluation intensity may result in high monitoring costs. This research looks into the layers of the workplace to investigate the best level of budget proposal evaluation intensity to decrease slack, by paying attention to the principles of effectiveness and efficiency. A 2 x 2 between-subject field experiment was conducted on 112 Accounting and Management students using the dyads analysis level. The level of budget proposal evaluation intensity and Locus of Commitment (Organizational versus Colleague) (LCOC) were each manipulated into two groups. An interaction between budget proposal evaluation and Locus of Commitment (Organizational versus Colleague) (LCOC) to decrease budgetary slack was found. Surprisingly, we found that on low level budget proposal evaluation intensity, slack would be lower after being moderated by higher LCOC. LCOC may be used as an effective alternative strategy for informal control system and low-cost management tools. Individuals and companies are interrelated parts that cannot be examined from two different perspectives. Most research on budgetary slack considers commitments separately (i.e: organizational, individual, and colleague commitments) and has been focused on the effectiveness of mitigating budgetary slack. However, effectiveness is not always aligned with organizational efficiency goals. High evaluation effectiveness can lead to higher costs. This research study complements the literature by considering the effectiveness and efficiency of one test model, by simultaneously considering assessing commitments at various levels of the workplace.