Drivers of resistance to changing the budget proposal: A case study of a negotiated budgetary process

Abstract

This study focuses on the budget proposal and it investigates the drivers of manager’s behavior in budget negotiations, measuring it as manager’s resistance to changing the initial budget proposal. Based on cognitive dissonance theory and negotiation theory, this study develops three propositions that are investigated with a case study on an Italian subsidiary of a multinational company. Data were collected with a multi-method approach using interviews, questionnaires, archival data and direct observation. Findings indicate that manager’s perceived freedom of choice of the initial budget proposal and manager’s negotiation of a proposed budget with each of the low level manager he supervises, before negotiating his budget proposal with the superior, increase manager’s resistance to changing the initial budget proposal in the negotiation; and that, instead, manager’s perceived level of initial information asymmetry with the superior reduces manager’s resistance to changing the initial budget proposal