Effect of Budget Participation on the Effectiveness of Vertical Information Sharing, Psychological Capital and Management Commitment and its Impact on Management Performance

Abstract

Aims: Internal problems of manufacturing companies as business entities also still need to be resolved, especially related to budgeting participation, vertical information sharing, psychological capital, manager commitment so that they have an impact on the performance of company managers. This research aims to prove empirically what determines the performance of managers of manufacturing companies listed on the Indonesia Stock Exchange (BEI). Study Design: The research uses the basis of Goal Setting Theory to elaborate on the relationship between goals set and performance achievement Place and Duration of Study: Research data was collected through questionnaires and interviews, which were carried out on 108 managers representing each manufacturing company listed on the Indonesia Stock Exchange (BEI). Methodology: The population is managers from 183 manufacturing companies listed on the IDX as of December 31 2021. From this population, a sample of 124 managers from 108 manufacturing companies listed on the IDX was obtained. Data were analyzed using Structural Equation Modeling (SEM) statistical techniques. Results: The research results show that psychological capital, manager commitment, and the effectiveness of vertical information sharing are influenced by budgeting participation. The test results also prove that budgeting participation, psychological capital, manager commitment have an influence on manager performance. However, the effectiveness of vertical information sharing does not have a significant positive effect on manager performance. The findings of this research add to the limited research literature on the elaboration of performance determination in manufacturing companies. Conclusion: The manufacturing industry has a very important role in the national economy. The manufacturing industry is the main support for economic growth or a source of Gross Domestic Product (GDP), employment, increasing export value and increasing investment flows. Elaboration of the variables that influence the performance of managers in manufacturing companies listed on the IDX is something that is of concern to both researchers and practitioners in the manufacturing industry.