2023-11-022023-11-02198717541650https://hdl.handle.net/10657/15372A major problem facing all organizations is that of maximizing efficiency. Modern organizations exert much effort to improve operational efficiency and yet there is much evidence to suggest that this goal is very difficult to attain. The behavioral theory of the firm states that managers often tend to satisfice rather than maximize. This often causes organizational efficiency to be at a suboptimal level. There is theoretically a minimum payment which organizations can make and still retain participation by individuals within the organization. Organizational slack is defined as payments made by the organization in excess of the minimum required to retain participation. When these payments are made to internal groups, internal slack is said to exist. Since internal allocations are usually formulated in the budget, internal slack is often called budget slack. Prior studies of the budget process provide evidence that the budget system is a major factor in the creation of slack. However, the concept has received a limited amount of research attention. The slack variable has been primarily treated in conceptual terms and has not been effectively operationalized. This study had five basic objectives. The first objective was to identify from the literature certain factors which have been associated with budget slack. Another objective was to obtain an objective budget slack indicator from published financial data. The third objective of the study was to obtain from a field study a subjective measure of budget slack and a subjective measure of certain factors which contribute to budget slack. Fourthly, the study sought to test the significance of correlation between the subjectively determined measure of budget slack and the objective indicator obtained from published financial statements. A final objective of the study was to test the significance of correlation between the measures of budget slack and the measures obtained for each budget slack contributing factor. Regression analysis and Spearman's Rank Order Correlation were used to test the relationships of the variables under study. The objective and subjective slack indicators were found to have a moderately positive relationship, though the result was not significant. Of the five slack contributing factors identified, the budget's link to the company reward system showed the strongest relationship to budget slack. The variables budget participation and budget pressure produced inconclusive results. No evidence was found to support the decentralization variable or the economic environment variable as contributors to budget slack.application/pdfenThis item is protected by copyright but is made available here under a claim of fair use (17 U.S.C. Section 107) for non-profit research and educational purposes. Users of this work assume the responsibility for determining copyright status prior to reusing, publishing, or reproducing this item for purposes other than what is allowed by fair use or other copyright exemptions. Any reuse of this item in excess of fair use or other copyright exemptions requires express permission of the copyright holder.Budget in business--Mathematical modelsOrganizational behavior--Mathematical modelsThesisreformatted digital