Investigating the effect of budget goal difficulty on budget holders’ performance in a hybrid environment

This study advances management accounting research by proposing\r\nand testing a mediational model within a hybrid budgeting setting.\r\nSpecifically, it investigates how budget goal difficulty transmits\r\ndirectly and indirectly on budget holders’ performance the beneficial\r\ncognitive and motivational effects of budgetary participation. To\r\nexplore this relationship, survey data were collected from a sample\r\nof hybrid budget holders, and the hypotheses were tested using\r\nstructural equation modeling. The results confirm that higher levels\r\nof budgetary participation are associated with more challenging\r\nbudget goals. In turn, increased goal difficulty prompts medical\r\nmanagers to invest greater effort in achieving these goals, thereby\r\nenhancing their budgetary performance. Notably, budget goal\r\ndifficulty fully mediates the relationship between participation and\r\nperformance. The findings suggest that the cognitive benefits of\r\nparticipation are internalized as stronger beliefs in one’s ability to set\r\nchallenging yet attainable goals, which indirectly foster improved\r\nmotivation, effort, and task focus. This study contributes to the\r\nmanagement accounting literature by offering a novel perspective\r\non the mechanisms linking participation and performance in hybrid\r\ncontexts. It also carries important policy implications, demonstrating\r\nthat the introduction of business-like techniques—such as\r\nbudgeting—can improve performance, provided that attitudinal\r\nand behavioral variables are adequately stimulated.