The impact of budgetary planning on resource allocation: evidence from a developing country

Abstract

Purpose

The purpose of this paper is to empirically examine whether firms in Ghana allocate resources through the use of budgetary planning principles.

Design/methodology/approach

A survey was conducted using top business executive and budget holders of the firms listed on the Ghana Stock Exchange. The data were analyzed using the structural equation modeling (SEM) and, in particular, the PLS-SEM approach.

Findings

The study demonstrates that there is a statistically significant relationship between budgeting, performance management, and resource allocation constructs. The results indicate that performance management partially mediates the relations between budget planning and resource allocation. This indicates that firms in Ghana behave optimally by allocating resource using budgetary planning principles.

Research limitations/implications

The study is limited to the firms listed on the Ghana Stock Exchange. As a policy implication, this study has established that efficiency revolves around making the possible use of a given set of resources and as such firms in Ghana allocate resources through the use of budget.

Originality/value

There have been just a few studies that tried to integrate budgeting, performance management, and resource allocation in a comprehensive framework to deal with agency problems.

Citation

Kwarteng, A. (2018), "The impact of budgetary planning on resource allocation: evidence from a developing country", African Journal of Economic and Management Studies, Vol. 9 No. 1, pp. 88-100. https://doi.org/10.1108/AJEMS-03-2017-0056