Budgeting and Employee Stress in Times of Crisis: Evidence from the COVID-19 Pandemic

32 Pages Posted: 25 Dec 2020

See all articles by David S. Bedford

David S. Bedford

University of Technology Sydney (UTS)

Roland F. Spekle

Nyenrode Business University

Sally K. Widener

Clemson University

Date Written: December 15, 2020


Studies have shown that that management control practices change in response to global crises as firms attempt to manage the accompanying uncertainty and financial strain (Asel, Posch and Speckbacher 2010; Becker, Mahlendorf, Schäffer and Thaten 2016; Janke, Mahlendorf and Weber 2014). The purpose of this study is to develop more comprehensive insights into the behavioral effects that stem from such changes. Using survey data from business unit managers in the Netherlands, our results show that firms tighten their budget controls in response to a negative impact of Covid-19. In turn, the tightening of budget controls increases employees’ emotional exhaustion because of increased perceptions of role ambiguity and role conflict. We also find that the effect of tighter budget controls on role ambiguity is mitigated when the budget controls are used in an enabling way but heightened with increasing trust in superiors. These results suggest that if firms use their budgets to help managers acquire a deeper understanding of their tasks and responsibilities, this allows them to respond with flexibility to the tighter budgetary controls, which helps mitigate the undesired behavioral response of increased role ambiguity and emotional exhaustion. Our findings also suggest that trust, which usually is beneficial to organizations, has a ‘dark’ side in that managers will push themselves harder to reciprocate the trust they have in their superiors, thus, increasing their stress in the form of role ambiguity and, in turn, emotional exhaustion.

Keywords: Role stress, Emotional exhaustion, Budgeting, Crisis, Enabling budgets, Trust in superior

JEL Classification: M41

Suggested Citation

Bedford, David S. and Spekle, Roland F. and Widener, Sally K., Budgeting and Employee Stress in Times of Crisis: Evidence from the COVID-19 Pandemic (December 15, 2020). Available at SSRN: https://ssrn.com/abstract=3749883 or http://dx.doi.org/10.2139/ssrn.3749883

David S. Bedford

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007

Roland F. Spekle (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC

Sally K. Widener

Clemson University ( email )

Clemson, SC 29634
United States

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