Academic journal article International Review of Management and Business Research

Decentralized Budget Impact on Managerial Performance: Evidence from Private Jordanian Universities

Academic journal article International Review of Management and Business Research

Decentralized Budget Impact on Managerial Performance: Evidence from Private Jordanian Universities

Article excerpt

Introduction

Before 1989, around half of all Jordanian students were studying abroad each year, which affected the economy. As a partial response, the Jordanian government established private universities in 1989 because which does not rely on government subsidies. The new system ended the flow of hard currency out of the country, created new jobs, and provided competition to the public sector. According to Issa (2000), Jordan leads the Middle Eastern countries in running for-profit universities: the seventeen private Jordanian universities (unlike private universities elsewhere1) run on a commercial basis. This gives rise to serious questions about the impact of profit incentive on private universities. It has been argued that such p rivate universities do not protect the quality of education. However, figures taken from the MoHE report that the cost per student in private universities is higher than comparable costs in public universities, thus providing some evidence that these institutions spend more to maintain good educational quality and services. Burke and Al-Waked (1997) argue that no evidence exists to prove that public universities are providing a better education than private universities. Over the last two decades, PJUs have proved their ability not only to absorb the surplus of Jordanian students, but also to attract foreign students2. Presumably, organizations are concerned about their goals and influenced by external and internal factors. National culture (Hofstede, 1981) and external environment (Merchant, 1981) are the major external factors that have been examined at the company level in management accounting literature. Organisational size (Bruns & Waterhouse, 1975; Merchant, 1981), technology (Dunk, 2007) centralisation, and environmental uncertainty (Ezzamel, 1990) are the main internal factors that have been examined in management accounting research. This is supported by Otley (1978). Haldma & Laats (2002) draw a theoretical framework of the contingency approach describing a process which influences management accounting practice and the effectiveness of performance measurement and evaluation.

Budgeting systems are an important thrust of management accounting research. The budgetary process has to be administered effectively, in terms of many factors, such as initial planning, final approval and subsequent monitoring of implementation (Drury, 2008). The process of budgetary system reform is described and examined by Diamond (2003). He states that a budget process reform is required to move from traditional, centralized, input-oriented systems to more modern devolved performance-based systems, focusing on the constraints of limited managerial capacity.

The effect of budgetary goal characteristics (dimensions of budgeting style) on job-related attitudes, budget-related attitudes and performance is investigated by Kenis (1979). He distributed a questionnaire to department managers and supervisors in 28 plants, on the basis that the managers had maintained responsibility for both the budget and performance evaluation management. 26 Likert-type questionnaire items, scored from one to five, were used to measure budgetary goal characteristics by employing factor analysis. Diamond (2003) finds that most previous views of budget management focus on resource allocation, input control, and primarily the level of centralization. On other hand, Schmidtlein (1999) questions the feasibility and desirability of governments and institutions implementing performance budgeting practices. He focuses on examination of the concept of performance budgeting and uses it in the context of other budget concepts. Schmidtlein describes types of performance budgeting and analyses assumptions underlying budgeting and earlier budget reform.

The use of strategic planning in a HE context has also been investigated extensively (e.g. Moll, 2003; Thys-Clement & Wilkin, 1998) with the aim of finding out whether universities have strategic plans, and if so, how they develop these plans and put them into practice. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.