The Effects of Organizational Culture on Budgetary Conflict: Integrative Versus Distributive Conflict Resolution

Abstract

Like conflict in general, budgetary conflict is perceived by conflicting parties as a zero-sum game or distributive: one party's gain is the other party's loss. We identify an organizational culture that promotes this view as “traditional.” We propose that changing certain elements of organizational culture is sufficient to produce more integrative, nonzero-sum outcomes. We call this changed organizational culture “empowering.” We propose and test the effects of an empowering organizational culture (EOC) in contrast to the traditional organizational culture (TOC). We hypothesize that an EOC would produce more integrative conflict resolution than the typical TOC. Based on our review of the literature, we identify two elements of the EOC that are essential in producing more integrative solutions to budgetary conflict. The two elements that we simultaneously manipulate are the superior's empowering style (or lack thereof) as reflected in encouragement to freely negotiate, and the superior's intervention process in failed negotiations (a process that encourages the search for integrative solutions and avoids imposed compromises that dampen the desire to negotiate). Using a laboratory experiment, 84 subjects forming 42 dyads negotiated the allocation of discretionary budgets face-to-face. The results of the experiment confirm our hypotheses that the EOC produces more integrative budget negotiation outcomes, greater convergence, and greater satisfaction with the outcome than TOC.

Citation

Elias, N. and Notz, W.W. (2007), "The Effects of Organizational Culture on Budgetary Conflict: Integrative Versus Distributive Conflict Resolution", Lee, J.Y. and Epstein, M.J. (Ed.) Advances in Management Accounting (Advances in Management Accounting, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 107-140. https://doi.org/10.1016/S1474-7871(07)16003-2