RELIANCE ON BUDGETARY CONTROL, ENVIRONMENTAL UNCERTAINTY, AND THE PERFORMANCE OF MANUFACTURING AND MARKETING UNITS

Responses to environmental uncertainty have included designating marketing units to interface with the environment to enable manufacturing units to operate in conditions approximating certainty. If buffering is effective, the impact of environmental uncertainty should be lower and conditions may be more suitable for a greater reliance on budgetary control in manufacturing than in marketing departments. The objectives of this study are to first, assess if there is a difference in the level of environmental uncertainty between these functions. Second, to evaluate if the relation between reliance on budgetary control and unit performance is influenced by departmental function. Third, since function and environmental uncertainty are unlikely to be perfectly correlated, if environmental uncertainty influences that relation. The results suggest that there is no difference in the level of environmental uncertainty or reliance on budgetary control between manufacturing and marketing departments. Furthermore, the findings suggest that reliance on budgetary control is no more effective in enhancing performance in either unit category. On relaxing the presumption that function proxied for environmental uncertainty, it was found that reliance on budgetary control is more effective in enhancing performance in conditions of low rather than high environmental uncertainty.