BUDGETARY PARTICIPATION IN PUBLIC SECTORS: A FOCUS ON VIETNAM.

• Author: Ngo, Quang-Huy

1. Introduction

   In 1986, the Vietnamese government introduced a new economic reform, Doi Moi (Renovation) policy, which allows significant change towards a socialist market economy. One of the critical elements of this reform is the public administration reform, which enables the improvement of public management's efficiency by adopting new public management (Painter, 2003). The basic idea of new public management is that this approach allows public sectors to operate as businesslike organizations (Kolthoff, Huberts and Van Den Heuvel, 2006). Thus, it is required for public institutions to adopt management practices to become more businesslike organizations (Hyndman and Lapsley, 2016).

   The adoption of budgeting/accounting practices for managerial purposes from private sector into public sector seems to be promising for improving efficiency because it is suggested that the budgeting process has a tremendous impact on resource allocation and spending in public entities (Anessi-Pessina and Steccolini, 2005; Jackson and Lapsley, 2003). A recent review of this research in public management addresses two issues (Anessi-Pessina et al., 2016). First, studies that examine the impact of budgeting practices at the micro-levels (e.g., managerial levels) are scarce. Second, the dominant research is on European countries, while there are two studies in the Asian region, which does not include Vietnam. It is strongly argued that the adoption of management practices as budgeting practices may vary from country to country due to the country's unique characteristics (Bloom and Van Reenen, 2010). Thus, it seems budgeting knowledge at the micro-levels in Vietnam is still limited.

   The purpose of this study is to address this gap. Particularly, similar to the study of Yahya, Ahmad and Fatima (2008), this study examines the influences of budgetary participation on managers working in public schools in Vietnam. Drawing from the nomological network (Shields and Shields, 1998), the framework of participation in decision-making (Locke and Schweiger, 1979) and self-determination theory (SDT) (Deci and Ryan, 1985), this study proposes that budgetary participation fosters motivational and cognitive effects on managers, which in turn leads to higher managerial performance. For motivational effects, this study hypothesizes that when managers participate in the budgeting process, the degree of autonomous motivation is high, which, as a result, enhances managerial performance. Regarding cognitive effects, participation in the budgeting process acts as a conduit of information sharing and improves managerial performance. The results suggest that participation in the budgeting process can foster managerial autonomous motivation and information sharing. However, managers can find performance improvement thanks to information sharing rather than autonomous motivation.

   In light of these findings, this study contributes to the research in public management threefold. First, according to a recent review on the budgeting research in public management (Anessi-Pessina et al., 2016), budgeting research in public management is dominated by studies focusing on European countries, while there is a lack of studies focused on the Asia region. For example, only two studies focus on the Asia region, while forty-nine papers focus on European countries. Consistently, in the review of the studies on management accounting in public management, Van Helden and Uddin (2016) raised a concern, which is a lack of study on budgeting studies in the public sector in emerging countries, and urged future studies should shift their attention to this practice in this area. With that regard, knowledge on budgetary participation in public management in emerging countries is still limited. This study addresses this gap by examining budgetary participation in the public sector in Vietnam.

   Second, in the public management literature, budgeting studies at the micro-levels aim to establish the role of budget/accounting information on performance at managerial levels. However, the crucial role of the explanatory framework should be emphasized to explain the impact of budgeting on its outcomes (Anessi-Pessina et al., 2016). The study of Yahya, Ahmad and Fatima (2008), which shares similarities with this study, does not consider theoretical frameworks to propose the research model. It leads to a major concern in the research of management accounting in public management, which Van Helden and Uddin (2016) referred to as the lack of theorization. It hampers a deeper understanding of research problems or questions (Jacobs, 2012) and limits the development of the academic body of knowledge. However, this study overcomes this limitation because it draws from the framework of participation in decision-making, nomological network, and SDT to propose the research model.

   Third, the use of SDT in public management research has been rocketed from the study of Kuvaas (2009) because of the high possibility of integrating this theory with public sector motivation (see Andrews, 2016). In this line of research, much attention has been paid to autonomous motivation because it fosters positive effects on public staff, such as the enhancement of upward activities (Chen, Berman and Wang, 2017) and improvement of work engagement (Moreira-Fontan et al., 2019) as well as reduction of turnover intention (Mustafa and Ali, 2019). This study extends this research line by providing additional empirical evidence showing that autonomous motivation induces information sharing. Furthermore, although autonomous motivation is linked with positive outcomes, it is shown that enhancing autonomous motivation is quite challenging (see van Loon, Baekgaard and Moynihan, 2019). Thus, by showing that budgetary participation induces this motivation, this study contributes to the literature of SDT in public management by considering budgetary participation as a means to foster autonomous motivation.

   The remainder of this paper is structured as follows. The next section provides the research context. The following section reviews the literature and develops the hypotheses. Then, section 4 presents the methodology used in this study. Section 5 provides the results of this study as well as the discussion. The last section concludes and provides limitations and future research.

2. Research context

   2.1. Educational system in Vietnam

   The educational system in Vietnam has a long tradition. According to Nguyen et al. (2020), this system has changed much from the system organized according to the ancient Chinese models to the modern system nowadays. At the moment, this system follows a common approach, which can be observed in any country. According to this system, the basic education consists of five levels: preschool (e.g., kindergarten), primary school (e.g., grades 1 to 5), secondary school (e.g., grades 6 to 9), high school (e.g., grades 10 to 12), and higher education (e.g., diploma and higher).

   The education system shares many similarities with any modern educational system in the world nowadays. There are two educational entities: private and public entities (e.g., kindergartens, schools, and universities). They both operate under educational law (see Vietnam National Assembly, 2019). The private entities recently appeared in the system due to the implementation of the Doi Moi policy. The financial source of these entities is the tuition fee. In contrast, the source of public sectors' operation is mainly government funding. According to the law, there is a ceiling fee applied to public entities. In this regard, studying in public entities has a lower tuition fee than studying in private ones. Furthermore, there is also a no-tuition fee policy for pupils and students who live in difficult development areas. As a result, the operations of these public entities depend much on government funding.

   2.2. Budgeting process

   Due to the dependency on government funding, budget settings in public schools must follow the State Budget Law (see Vietnam National Assembly, 2015). This law provides details about the procedure of budget setting in public entities and the responsibility of each party involved in the budgeting process. Because this study is interested in the budgets of public schools, the following paragraph provides insight into how the final budgets of these schools are set.

   A document used for managerial training at public schools provides insight into establishing the budgets (see Nguyen, 2004). There are two parties involved in the budgeting process. The first party includes the schools. The school can only propose the draft budget, and send it to the financial department. The second party is the financial department, which has authority on budget finalizations. It is noted that the budgeting process of elementary and secondary schools requires the involvement of the financial department at district levels, while the budgeting process of high schools requires the involvement of the financial department at city level. The schools play subordinate roles, while the financial departments play superior roles in the budgeting process.

   The budgeting process is as follows. First, the budget is initiated at the school level. This budget covers the expenditures for the upcoming year. There are two types of expenditures: frequent and infrequent expenditures. The frequent expenditures cover expenses in one year. Some expenses are teachers' salaries, awards and sponsors for pupils, and other expenses for frequent operations. The infrequent expenditures commonly include expenses used for national missions (e.g., improving the rate of pupils going to schools in underdeveloped areas), the expenses for unexpected tasks assigned by the city, and other infrequent expenses.

   After that, it is sent to upper management levels (financial department at city or district levels). It is commonly observed that a representative working in the...