The Moderating Effect of Social Norm Sensitivity on Organizational Control: An Experimental Examination Using a Participative Budgeting Setting

38 Pages Posted: 29 Apr 2020 Last revised: 13 Jul 2021

See all articles by Heba Abdel-Rahim

Heba Abdel-Rahim

University of Toledo

Jing Liu

Chapman University

Douglas E. Stevens

Georgia State University - Robinson College of Business

Date Written: July 1, 2021

Abstract

This study examines the moderating effect of social norm sensitivity on organizational control using a participative budgeting setting found in the literature. Experimental researchers have documented that subordinates report more honestly in their budget in the presence of an information system that reduces information asymmetry regarding the level of honesty in the budget. Consistent with prior results, we observe an increase in reporting honesty when the information system is randomly assigned. When the information system is chosen by the superior, however, this increase in reporting honesty is significantly reduced. We find that this reduction is attributable to the behavior of subordinates who score high in social norm sensitivity as measured by the Responsibility scale of the JPI-R. Exit questionnaire responses reveal that while both high and low norm sensitivity subordinates viewed the superior’s choice of an information system as a signal of distrust, only high norm sensitivity subordinates felt less obligated to report honestly as a result. A path analysis provides further evidence that the superior’s choice reduced reporting honesty by reducing perceived trust in high norm sensitivity subordinates. This study documents a negative effect of signaling distrust to agents who view themselves as trustworthy, which has broad implications for organizational control.

Suggested Citation

Abdel-Rahim, Heba and Liu, Jing and Stevens, Douglas E., The Moderating Effect of Social Norm Sensitivity on Organizational Control: An Experimental Examination Using a Participative Budgeting Setting (July 1, 2021). Available at SSRN: https://ssrn.com/abstract=3569067 or http://dx.doi.org/10.2139/ssrn.3569067

Heba Abdel-Rahim (Contact Author)

University of Toledo ( email )

The Accounting Department
College of Business and Innovation
Toledo, OH 43606
United States

Jing Liu

Chapman University ( email )

1 University Drive
Orange, CA 92866
United States

Douglas E. Stevens

Georgia State University - Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States
404-413-7212 (Phone)
404-413-7203 (Fax)

HOME PAGE: http://robinson.gsu.edu/profile/douglas-e-stevens/

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