An Experimental Examination of the Combined Effects of Normative and Instrumental Commitments on Budgetary Slack Creation: Comparing Individuals versus Group Members

Abstract

Purpose

The purpose of this study is to investigate how a combination of Normative Commitment (NC) and Instrumental Commitment (IC) affects the creation of budgetary slack when the decision-making mode is individual versus group.

Methodology

We use 86 students in a two-by-two experimental design (individuals vs. groups and a combination of NC/IC vs. no NC/IC), fully crossed between participants, to examine the combined effects of NC/IC on budgetary slack creation by individuals and group members.

Findings

The results show that groups without NC/IC create the highest budgetary slack and differ from the other three experimental cells (groups with NC/IC and individuals with and without NC/IC). In addition, individuals with NC/IC also differ from individuals without NC/IC.

Research limitation

Research limitations are formation of groups, validity threats common to laboratory experiments, and generalizability of the findings. We do not believe these limitations are affecting the results.

Practical implications

As organizations continue to increase the use of group decision-making for setting their budgets, they may want to monitor groups with low NC/IC due to higher slack creation.

Social implications

Use of groups can impact prosocial behavior via creating a “label” and/or forming social ties in budgeting.

Originality/value of the paper

This study extends budgetary slack creation under individuals versus group decision-making, introduces the combined effects of NC/IC as a psychological contract to the accounting literature, and examines the combined NC/IC effect on groups as compared to individuals.

Citation

Nouri, H. and Kyj, L. (2014), "An Experimental Examination of the Combined Effects of Normative and Instrumental Commitments on Budgetary Slack Creation: Comparing Individuals versus Group Members", Advances in Management Accounting (Advances in Management Accounting, Vol. 22), Emerald Group Publishing Limited, Leeds, pp. 225-260. https://doi.org/10.1108/S1474-7871(2013)0000022014