Budget behaviour and cultural contingencies: case study in a Tunisian company

In recent decades, budgetary participation has attracted increasing attention (e.g., Amir et al., 2021; Apriwandi & Supriyono, 2021; Baccouri & Fedhila, 2017; Brownell, 1981; Brownell & Dunk, 1991; Kren, 1992; Lau et al., 2018; Lleo et al., 2020; Santos et al., 2021; Sofyani et al., 2020). Budgetary participation is defined as a process by which a manager is involved with, and has influence on, the determination of his or her budget (Shields & Shields, 1998). It is the practice of allowing managers to participate in the decisions by which budgets are established to measure and evaluate their performance (Swieringa & Moncur, 1975). The authors agree that the imposed budget is a source of discontent and that participation has many positive effects (Bonache et al., 2012). It has a positive impact on a variety of emotional and behavioural responses, including motivation (Brownell, 1982; Brownell & McInnes, 1986; Mahdavi et al., 2021; Mulyanah & Puspanita, 2021), job satisfaction (Ginting, 2021; Kahar et al., 2016; Zonatto et al., 2020), perceived justice of the budget process (Mui Yee et al., 2016), and managerial performance (Brownell & McInnes, 1986; Kahar et al., 2019; Nabhan & Munfa’ati, 2021). Participation might be a remedy for some negative effects associated with budgeting (Argyris, 1952, p. 28). Meaningful participation will be crucial to the success of companies in the 21st century (Delaney & Huselid, 1996). Hence, it seems reasonable to expect it to be widespread in Tunisian companies, especially in an economic context that certainly creates prospects but also faces several challenges and constraints. In fact, Tunisia’s accession to the World Trade Organisation (WTO) agreements and the signing of agreements to create a free trade area with Europe, which came into force in 1996, have gradually opened the Tunisian market to international competition.

Following the path of Argyris (1952), many researchers have examined the behavioural and organisational effects of budgetary participation at both the international (Apriwandi & Supriyono, 2021; Ginting, 2021) and Tunisian (Baccouri & Fedhila, 2017; Boujelbene & Affes, 2012; Dakhli, 2021) levels. However, studies focusing on the forms of budgetary participation and the explanatory elements relating to it are rare. This research has the motivation, therefore, of investigating this budgetary practice from a field survey and case study in a context still little explored (Ben Hamadi et al., 2014). Prior research that examined the budgetary participation was conducted in American, European, and Australian contexts. Nevertheless, none of these studies examined the African and Arabic contexts (Dakhli, 2021; Mansour, 2015). Hence, additional scholarly research is thus required on how this budget method is used in companies in a developing country setting, namely Tunisia. Our study findings will thus provide additional evidence for the existing literature related to budgetary participation antecedents (Khadafi, 2015; Widiawati et al., 2019) in a particular sociocultural context. Addressing the Tunisian context, with its unique cultural values, will certainly enrich a still insufficient literature on Tunisian management by highlighting the culturalism of the practices used.

A review of the limited research conducted in Tunisia or in other close sociocultural contexts (Arab countries, Maghreb countries) reveals a low rate of participation of operating managers in the management control systems of their companies (Mansour, 2015). Management in the Arab countries is vertical and authoritarian. It still subscribes to the classic notion of management based on the centralisation of authority and control (Parnell & Hatem, 1999). On the Maghreb scale, management that is viewed as classic and paternal characterises most of the companies (Allali, 2008; Azzouz & Ben Mahjoub, 2017; El Louadi, 2015). On the budgetary side, Elhamma (2011) concluded that Moroccan companies show a low (37%) or even weak (47%) enthusiasm for budget participation. In the Tunisian context, Zghal (2008) found similar results, showing the affinity of Tunisian managers for the paternalistic style where the subordinate is ready to do anything to show loyalty to his or her superior. Participation generally concerns only the managers who belong to the second level of the hierarchy (Lassoued, 2008, p. 19).

However, all the studies previously mentioned are far from being conclusive; thus, they do not allow us to expressly decide the forms of budgetary participation practised by Tunisian companies. In an attempt to explain the lack of conclusiveness of results, some researchers have advanced culture as a contingency variable that greatly conditions budgeting behaviours (Chow et al., 1999; Hofstede, 1987; O’Connor, 1995; Tsui, 2001). Culture could guide an individual’s behaviours through fundamental values, norms, and assumptions (Bonache et al., 2015). According to Bourguignon et al. (2002), understanding the relationship between culture and management tools is crucial to the control system’s effectiveness. The purpose of this research is, therefore, to understand the budgetary participation practices of Tunisian companies by suggesting answers to the following questions:

Answering these questions implies using a theoretical framework that proposes a list of factors that can influence aspects of the budget process, especially the operating manager’s participation. I approach it from the perspective of contingency theory, which constitutes the mainstream approach of the study of control systems (Covaleski et al., 1996) and has “the merit of presenting management control as eminently adaptable to different types of organizations” (Pariente, 1998, p. 4).

The remainder of the article is structured as follows. The next section clarifies the conceptual framework of the research. I then outline the research methodology used and present the empirical results. The final section discusses the main results and introduces the perspectives for future research.

This study is based on a classic approach in the sociology of organisations that considers the company as a system of interdependent actors behaving in response to constraints of their environment. While conscious of other factors that would result from the field investigation, we recognise the influence of the cultural environment on budgetary behaviour. Therefore, from the perspective of contingency theory, we study the budgetary behaviours of Tunisian managers. It is crucial to highlight, in what follows, the key concepts of this study—budgetary participation and culture—and justify the choice of the contingency theory as an analysis framework.

The budget process is viewed from the perspective of organisational control. Like some researchers (Hope & Fraser, 2003), this study recognises that the budget process is iterative and includes budget preparation and use. I propose to study the extent and forms of operating managers’ participation in the budget processes of their companies. Budgetary participation is defined as a process whereby subordinates are given the opportunity to get involved in and have influence on the budget-setting process (Brownell, 1982). It refers to the practice of allowing managers to participate in the decisions by which budgets are established to measure and evaluate their performance (Shields & Shields, 1998; Swieringa & Moncur, 1975). How budgetary participation is used can differ significantly from company to company and even from level to level or from position to position within a given company (Sponem & Lambert, 2010).

Some authors have questioned the reality of budget participation (O’Connor, 1995). According to them, budget participation could take two forms: real participation and pseudo-participation. It is the “influence” dimension that makes the difference. Besides being involved in the budget process by suggesting opinions and proposals related to the budget, the operating manager must be able to influence budget decisions. Otherwise, the process would be considered pseudo-participative (Argyris, 1952).

The contingency theory of organisations is the main theoretical lens that is used to view organisations. The essence of this theory is that the efficiency of the company derives from fitting its characteristics to the contingencies that reflect its situation (Donaldson, 2001, p. 1). In contrast to universalistic theories that state that there is “one best way” to organise, the contingency theory assumes that the performance’s achievement results from adopting the appropriate level of structural factors that fit the contingency.

In particular, how a budgetary system is developed and used was considered as a complex outcome of some contingent variables (Fuadah et al., 2020; Komarev, 2007). Some authors retained the structural contingency theory as a theoretical basis and demonstrated the existence of links between the structural and contextual characteristics of the company (size, structure, environmental uncertainty, culture) and its use of budgetary participation (Cheffi & Nekhili, 2011; Chenhall, 2003). The influence of size on the organisation and its management has been acknowledged for a long time. Budgeting techniques have proven to be more sophisticated the larger the size of the company (Bonache et al., 2015). Bescos et al. (2004) noted that in large firms, managers feel that they have greater influence and they are more involved in the establishment of budgets. This result confirms that of Merchant (1981). According to the latter, the larger the size of the company, the more participative the budgeting process is. Organisational structure is considered one of the determining factors in the design and operation of management control (Chenhall, 2003; Fuadah et al., 2020). A survey conducted by Bruns and Waterhouse (1975) showed that managers in centralised firms consider budgets to be less useful. Sponem (2002) showed that the most decentralised firms adopt essentially participative budgeting processes. According to Widiawati et al. (2019), contingency theory predicts that when the external environment becomes more uncertain, the company responds by increasing differentiation, which in turn requires increasing use of integrated mechanisms, such as budgetary participation to coordinate actions. It is argued that the amount of information that managers require for decision making depends on their external environment (Govindarajan, 1986; Kren, 2003; Sofyani et al., 2020; Sponem, 2002). As the environmental uncertainty increases, they look for more job-relevant information for planning.

Researchers from different disciplines have tried to find a comprehensive and universal definition of culture. According to Schein (1985), culture is defined as a complex set that includes knowledge, beliefs, art, morals, law, customs, and all other abilities and habits acquired by people as members of society. Culture is discerned as the collective programming of the mind that distinguishes members of a social group from members of other social groups (Hofstede, 2001).

According to Hofstede (2001), the term culture is normally reserved for societies (or nations), as well as for regional or ethnic groups, but it can be used for other human collectivity such as the firm, the profession or the family. In this sense, and attempting to explain the delay of the Arab countries in information and communication technologies, El Louadi (2015) advanced the sociocultural context of the Arab world. He concluded there is a significant influence of three supposedly descriptive values ​of Arab culture—namely, obedience to authority, collectivism, and conformism—on the adoption and use of these technologies. This reinforces Hofstede’s earlier findings, which grouped the Arab countries studied under the same heading, “the Arab group.” Like many studies dealing with the impact of culture on management control practices (D’Iribarne, 2008), it is the national (societal) culture that interests us. The majority of the studies carried out on budgets were run from an intercultural perspective using Hofstede’s cultural dimensions to demonstrate the diversity of budget practices in different countries (Chow et al., 1999; Frucot & Shearon, 1991; O’Connor, 1995). This research adopts an intracultural approach to understand, from an intracultural point of view that allows the discovery of pivotal cultural variables (Zghal, 2008), the budgetary behaviour of Tunisian managers in their relations with cultural values ​rooted in Tunisian society.

Culture has been shown to have a greater influence on the behaviour of actors in organisations (Harrisson & McKinnon, 1999). The perception of reality among group members affects their perceptions of the budget process and the value they place on their participation in it (Parnell & Hatem, 1999).

Literature has shown that power distance and individualism or collectivism, two cultural dimensions, are most related to participation. Collectivist societies are more interested in the group than in the individual. Participation has a moral basis and is interesting for the group. Employees in these societies have a strong desire to be involved in the decision-making processes of their companies (Mansour, 2015). On the other hand, for individualist societies, participation takes on a more calculated aspect (O’Connor, 1995) and is more relevant to the individual. Superiors are considered important people who can make all decisions (Chong & Caby, 2010). Their decisions are considered better than the decisions of the group. Thus, in such societies, the level of participation in the budget process is likely to be low. This research is more interested in the Tunisian culture, and especially its impact on companies’ budget practices. Some surveys focusing on Tunisian culture show a rather collectivist orientation (Zghal, 2008). They attest to the importance accorded, in Tunisian society, to relations due to various social affiliations (family, region, tribe, school, and workshop). However, other studies support the difficulty of distinguishing the individualist and collectivist tendency for Tunisian society. Lassoued (2008, p. 26) spoke of a more mixed Tunisian cultural model that develops collectivist and individualistic cultural values ​at the same time. This swing of Tunisian culture between collectivism and individualism can be explained, according to him, by the clan culture. Individuals of the same clan are in solidarity and cooperate together, whereas interactions between individuals of different clans are based on a rational calculation.

In companies with high power distance, hierarchies are institutionalised to formalise the power inequalities between superiors and subordinates. The latter accept power inequality as just and feel that their superiors have more knowledge and comprehension, are the most experienced in the company, and are therefore able to make the best decisions. Employees familiarised with a centralised autocratic style risk understanding any delegation of authority and any willingness to involve them in the decision-making process as a lack of responsibility from superiors and a heavy burden on them (Parnell & Hatem, 1999). Consequently, employees react unfavourably to participating in the budget discussions of their company. However, in societies with a low power distance, subordinates and superiors are equal in rights. Subordinates are supposed to be consulted on the decisions that concern them.

This research aims to achieve a deeper understanding of a complex concept, budgetary participation, in the rarely explored Tunisian context. It seems very simplistic to address the field with a prefixed conceptual framework that could lead us to favour some items over others that might be more relevant to our research problem. I opt, therefore, for an adaptive approach. While recognising from the outset the clear impact of the cultural environment on budgeting behaviour, this study seeks to enrich the conceptual framework with successive iterations between field data and theory.

A qualitative method underpinned this research. It is the most appropriate to the objective being explored. It is the methodological interest of this research. The majority of prior research in this area, including those studies conducted in Tunisia (Baccouri & Fedhila, 2017; Boujelbene & Affes, 2012; Dakhli, 2009), have used rather quantitative methodologies to address this problem. It is classic to link exploration to qualitative approaches (Yin, 2003) that enhance the researcher’s ability to describe a complex social system and allow answering “how” and “why” questions. It provides an in-depth understanding of the interaction between actors, their behaviours, and their feelings (Gagnon, 2012). In opting for a case study, the researcher must make another methodological choice: using a single case study or a multiple case study. In connection with the problem dealt with in this study, budgetary participation, which remains poorly explored in the Tunisian context, I opted for the former. Gagnon (2012) stated that the unique case study is recommended for an unexplored phenomenon. As advised by many researchers (Miles & Huberman, 2003; Pires, 1997), the choice of case was supported by theoretical criteria prefixed in coherence with objectives pursued and logistical criteria, essentially the possibility of access to companies. Many Tunisian companies do not yet foster relationships with the research community and are not familiar with some data collection tools such as interviewing and observation (Ben Fadhel & Soyah, 2004). As a result, I targeted companies where access is possible. The survey was conducted in a group of Tunisian companies listed on the Tunisian market since 2008. It is a group with Tunisian capital, created and managed by Tunisians. Organised around eight activity sectors, on 31 December 2014, it consisted of nearly 100 companies. For methodological reasons (data saturation), this investigation focused on seven companies in the group.

For data collection, we combined nonparticipant observation, document analysis, and a set of interviews. Qualitative research favours the use of speech data (interviews, documents) to the detriment of spontaneous observation and conversation data between actors, but it is the actions and practices of actors in their context and in a dynamic perspective that allow a better understanding of social practices (Allard-Poesi, 2015). In this sense, observation, “a data collection tool where the researcher becomes a witness to individuals’ behaviours and practices within groups by staying at the sites where they take place” (Martineau, 2005, p. 6), allows us to identify the interpersonal aspects of the budget process, including the interactions and resulting exchanges between participants. For this purpose, I participated in six budget meetings of an average duration of 1.5 hours. Simultaneously, I conducted 23 semidirected interviews supported by a guide and conducted face-to-face. I interviewed leaders, functional staff, and operating staff. The interviews lasted, on average, between 30 and 45 minutes. The research continued until data saturation was reached; at that point, no new data could enrich the analysis of new results (Hlady-Rispal et al., 2009). The interviews were recorded and transcribed. I had access to various corporate documents, and several documents relating to the management control system and specifically budget control were consulted.

For data analysis, I opted for a thematic content analysis approach following the procedure advocated by Miles and Huberman (2003) and recommended by other researchers (Bardin, 2003; Blai & Martineau, 2006; Dany, 2016). This method of analysis consists of “identifying general recurring themes in verbal or textual expressions that appear in various more concrete contents” (Mucchielli, 1996, p. 259). It is systematically identifying, grouping, and, alternatively, analysing the topics addressed in a corpus (Paillé & Mucchielli, 2008, p. 162). It consists of (a) fully transcribing the data collected verbatim, (b) cutting the speeches collected into different segments, (c) grouping them under pre-established codes from the literature or codes that emerge from the corpus itself, and (d) interpreting them.

To explain the budgetary behaviours of Tunisian managers, in particular budgetary participation, this study used two techniques of content analysis: contingency analysis and frequencies analysis. If the latter is interested in the popularity (importance) of an element, the contingency analysis refers, rather, to the relationship between elements. The grid displayed in Table 1 provides a perspective on contingency factors that were reported by our respondents (Table 1). The comments of the interviewees and their behaviour showed us that when they speak about the participative budgeting practices of their companies, they most often evoke cultural elements (high power distance, absolute obedience to authority) and individual elements (actors’ personalities). These factors, while interacting, create a lack of trust between superiors and their subordinates.

The analysis of the collected data confirms the influence of cultural values rooted in Tunisian society on budget attitudes and behaviours of Tunisian managers. The high power distance and absolute obedience to authority largely hinder the practice of budgetary participation in Tunisian companies.

No one can deny the clear influence of an individual’s personality on his or her attitudes and behaviours. With regard to the current research, two personal variables hinder the practice of real budgetary participation in Tunisian companies and largely justify the use of manipulated forms of participation.

The main purpose of this research was to understand, from a contingency perspective, the participative budgeting practices of Tunisian companies. In considering these findings, we can conclude that the Tunisian companies have serious difficulties with budgetary participation. The words of the actors and their behaviours refer to a set of factors that produce this budgetary behaviour by creating an inconsistency between the ideal environment for the development and success of a participative approach and the environment of the Tunisian company. The participative approach does not seem to be in harmony with the expectations and aspirations of the actors. The latter would not be, therefore, psychologically ready to appropriate it and improve themselves by using it. This inconsistency greatly hinders the implementation and success of participative budget management (Figure 1).

Budgetary participation, like any other decision taken in a participative way, has been shown to positively affect both the individual and the entire company (Amir et al., 2021; Hofstede, 1967; Kahar et al., 2016). It would be relevant for Tunisian companies to adopt and promote participative budgeting management. To foster the participation of operating managers in budget decision making, serious efforts of adaptation to the local context should be undertaken. Although management tools reflect a specific culture, their adaptation to other cultures remains possible (Bourguignon et al., 2002). They have their own dynamics of adaptation, likely to make them evolve according to the cultural contexts they encounter (Alofan et al., 2020; Lassoued, 2008; Oriade et al., 2021). It is a question of integrating the unique and the local with the global and the standard to reach an original configuration combining some principles inspired by the common management model with the persistence of local characteristics. For Boyer (1998), adaptations to the local context can have a lasting influence, to the point of eventually delivering a new hybrid practise of budgetary participation where the company selectively borrows what suits it while grafting it onto its cultural core. It is true that Tunisian society is marked by cultural values ​that do not foster participation, such as high power distance and absolute obedience to authority. Tunisian companies could, however, establish a new mentality that breaks with these characteristics. This could help establish a new organisational culture marked by a climate of trust, the abolition of hierarchical distances, competitiveness, and professionalism.

Figure 1

Surveys conducted by D’Iribarne (2008) in four countries (Mexico, Morocco, Cameroon, and Argentina) show that it is possible to reconcile universal management practices with local characteristics. A Tunisian version of a successful adaptation can be seen in a group of Tunisian companies called Poulina. This group has been able to combine universal and local practices (Yousfi et al., 2011). The great lesson to be learned from Poulina’s success is that culture is not an obstacle to the implementation of modern managerial techniques. This group was able to find ways to better integrate local methods of doing things while neutralising the most likely drifts. The best example is the evaluation system called PDT (Performance Development through a thousand-point evaluation). It is a system introduced in 2003 that directly links evaluations, goals achievement, and results to calculate the remuneration of managers and employees. It is a tool to recognise and reward merit. A well-honed process of arbitration between formal rigour and relational flexibility has optimised the effectiveness of this evaluation tool and has guaranteed its acceptance by the controlled actors (Yousfi, 2011).

Our study claims originality insofar as it is anchored in a developing country, namely Tunisia. Leaving the European or North American context where this budgetary practice was excessively investigated and addressing the Tunisian context, with the particularity of its cultural values, will certainly enrich a still insufficient literature on the Tunisian management by shedding light on the culturalism of practices implemented. This study aims, also, to help Tunisian managers who seek to introduce new management tools. It draws their attention to the precautions to be taken to increase the chances of their successful functioning. As we know, the transfer of management methods to sociocultural contexts other than their birth contexts did not occur without difficulties (Bourguignon et al., 2002). Our findings suggest that it is necessary for top managers to focus on the broader context in which this budgetary practice should be used. The success of budgetary participation certainly depends on the organisational setting in which it is implemented.

Despite the contributions of this research, it has limitations. The first one concerns the framework chosen to explain budget behaviours. Admittedly, culture has been shown to have a significant impact on a variety of affective and behavioural responses (Hofstede 1987; Ilyas, 2021; Kanan 2010), but it remains insufficient, on its own, to understand the budgetary practices. Mobilising the contingency theory with its two components, structural and behavioural, would be very relevant to explain the budgetary behaviour of Tunisian managers. Prior studies (Ben Hamadi et al., 2014; Chenhall, 2003) concluded that structural factors (size, structure, environment, technology) greatly influence a company’s management control system. Considering the instrumental predisposition of Tunisian companies to develop and succeed, a participative budgeting system is a promising research avenue. I propose, therefore, to express budgetary practices in terms of two-dimensional coherence, psychological and instrumental. Another limitation concerns the data collection tools. Budgetary participation is complex and requires an in-depth study and the establishment of a trust climate between the researcher and the subjects. We are fully aware that only a longitudinal analysis of the Tunisian company’s budgetary process can shed light on its aspects.