International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (745-759), Month: October 2019 - March 2020, Available at: www.researchpublish.com
The Influence of Institutional Pressure on Budgetary Slacks by Utilization of Information Technology as a Mediation Variable I Made Sukarmayasa1, Ni Made Dwi Ratnadi2, Ni Putu Sri Harta Mimba3, Dodik Ariyanto4 1,2,3,4 1,2,3,4
Udayana University
Faculty of Economics and Business, Bali, Indonesia
Abstract: Some local government funding comes from central government transfer income so that local governments experience institutional pressure to obey regulations that issued by the central government in the budgeting process. Research on the effects of institutional pressure on budgetary slack is still rarely found. The purpose of this study is to determine the effect of coercive pressure, mimetic pressure and normative pressure on budgetary slack by using information technology as a mediating variable. The sample is determined by the nonprobability sampling method, a purposive sampling technique. The number of samples was 38 Badung Regency Organizations with 100 echelon III and IV officials as respondents collected through questionnaires. Partial Least Squares (PLS) is used for data analysis with the help of SmartPLS 2.0 M3 software. The results of data analysis show that coercive pressure, mimetic pressure and normative pressure have positive effects on budgetary slack, the use of information technology has a negative effect on budgetary slack. Coercive pressure, mimetic pressure and normative pressure affect budgetary slack through the use of information technology. Keywords: institutional pressure, coercive pressure, mimetic pressure, normative pressure, utilization of information technology and budgetary slack.
I. INTRODUCTION The budgeting system has experienced several changes in the government sector since enactment of the law package in the field of state finance. (Law Number 17 of 2003 concerning State Finance, Law Number 1 of 2004 concerning State Treasury, and Law Number 15 of 2004 concerning Audit of Management and Responsibility of State Finance), which is a change that was originally a traditional budgeting into performance-based budgeting. The application of this system is expected to lead to an increase in the performance of agents. The agent referred to is the Regional Apparatus Organization which their role is the party that uses the budget and as a budget compiler. The budget then authorized by the Regional Head followed by endorsement by the Regional People's Representative Council (DPRD) as the principal party. The approach used in preparing the APBD (Regional Budget) is a bottom-up approach. This approach is used, so agents as budget users participate in preparing the budget (Mardhiana, 2018). A performance-based budgeting system is an efficient and participatory development process with the hope of improving performance. The budget is prepared by the executive as an agent and endorsed by the legislature as the principal. However, performance appraisal based on budget targets will encourage an agent to make budgetary slack for a better career path in the future (Suartana: 2010: 138). Situations and conditions such as giving bonuses, giving rewards, salary increases, and promotions are the things that most influence someone to achieve or exceed planned goals. It can affect their performance positively or negatively. Budgetary slack can occur in the condition of information asymmetry because the existence of biased information between superiors and subordinates that encourages subordinates or executors of the budget to make budgetary slack (Ayuni and Erawati, 2018). Information asymmetry has a positive effect on budgetary
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