1

Attitudes towards Management by Objectives: An empirical

investigation of self-efficacy and goal commitment

Tor Busch
Hgskolen i Sr Trndelag
Avdeling for konomisk-administrativ utdanning

Publisert: Scandinavian Journal of Management, 1998, vol.14, nr. 3, 289-299.

Abstract
The aim of this study was to investigate the relationship between attitudes towards
Management by Objectives (MBO) and the concepts of self-efficacy and goal
commitment, and the relationship between knowledge about the MBO programme
and these two concepts. Participation was used as a control variable. The results
revealed that self-efficacy in improving productivity and commitment to
productivity goals are both positively correlated to attitudes towards MBO. There
is no significant correlation between participation and attitudes towards MBO.
Furthermore, participation and self-efficacy in working with formal management
systems are positively correlated to knowledge about the MBO plan. The study
establishes self-efficacy and goal commitment as significant constructs in
explaining attitudes towards MBO in the public administration.


Introduction
Over the past few decades a wide range of reforms and management techniques
have been introduced in public administration to improve productivity and
efficiency -- management by objectives, total quality management, performance
measurement, zero-base budgeting etc. Management by objectives, or MBO, has
been used in government for more than 20 years, and Poister & Streib (1995)
concluded from a survey that MBO is still being widely used in municipal
management, although there is considerable in the way this traditional approach is
applied. 47 per cent of those responding indicated that they currently used MBO.
The figure was significantly higher in large cities, and slightly higher in
jurisdictions with city managers as opposed to the mayor/council form of local
government. In Norway all state agencies were instructed to introduce
management by objectives in 1990 and today MBO is probably the most
widespread short-term planning system in the Norwegian public administration.
MBO is often described as a tool that has fallen into disuse because its
requirements for predictable planning do not fit the current entrepreneurial culture
of many agencies (Fowler, 1990). However, Rodger and Hunter (1992), after
conducting a meta-analysis of MBO, found convincing evidence that MBO is
effective in public agencies. In all the studies examined, a productivity or
performance gain was reported after the introduction of MBO. Another finding
was that the impact of MBO was substantially greater where top-management
commitment was high. Participation and top-management support were also
stressed as important conditions for the success of MBO programmes.

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Over the last few decades research has been increasingly emphasising the
behavioural aspects of management techniques: factors such as cognitive
structure, attitudes, values, institutional rules, political processes and conditions of
power are regarded as being just as important as formal management systems, or
even more so (Luckett & Eggelton, 1991; March & Olsen, 1989; Mellemvik,
Monsen and Olson, 1988; Peters, 1993). Research has demonstrated that the
budgetary process has a strong symbolic function (Czarniawska-Joerges &
Jacobsson, 1989), that budgets define both a political and a financial space for
decisions (Olson, 1990), and that to a great extent budgeting represents ritualized
behaviour (Olsen, 1970). There are thus good grounds for a critical examination of
the conditions under which MBO will be an effective management tool leading to
real changes of behaviour among the staff, instead of being merely of a symbolic
or ritual nature.
Christensen (1991) investigated the use of MBO in Norwegian state agencies,
and in most of the studied organizations he found evidence of implementation
problems. The study reveals that resistance on the part of employees and the
culture of the organization were both significant variables in explaining the size of
these problems. This is in accordance with Levine (1980), where it is claimed that
if the organizational changes represent values which do not correspond with the
prevailing organizational culture, there will be opposition. These results indicate
that attitudes towards MBO among the employees may be a crucial variable that
will affect the success of the MBO programme.
In order to reach a better understanding of why problems may arise when MBO
is introduced in the public administration, it is important to investigate the factors
which may affect the attitudes of the employees towards the system. So far no
research has addressed these questions. According to Rosenberg and Hovland
(1960), an attitude consists of affective, cognitive and behavioural responses
towards an object -- the tripartite model. The affective variable represents
sympathetic nervous responses and verbal statements of affect; the cognitive
variable represents perceptual responses and verbal statements of belief; and the
behavioural variable represents overt actions and verbal statements concerning
behaviour.
Although this model has not been used extensively to guide research (Pratkanis
& Turner, 1994), it does stress that the cognitive representation of an attitude is
critical to an understanding of the construction of attitudes. What employees
believe about the possible negative or a positive effect of MBO on their work
situation, on important stakeholders, on values and norms in the organization etc,
will to a large degree influence their attitudes towards this management technique.
A major contribution to our understanding of cognitive processes in problem-
solving has been made by Newell and Simon (1972). On basis of their research
among other things, Busch (1997) argues that in order to understand the way
management techniques may affect problem-solving, four dimensions are
essential: the cognitive structure of the employees, the degree of commitment to
the goals that are to be attained by the techniques, the degree of acceptance of the
rationality embedded in the techniques, and the self-efficacy of the employees in
using the techniques in their day-to-day work.
The purpose of this article is to investigate the relationship between attitudes

3
towards MBO and two of these dimensions - the concepts of self-efficacy and goal
commitment, and the relationship between these two concepts and the prevailing
knowledge about the MBO programme. Since participation has proved to be a
significant variable both in studies investigating the effect of MBO and in budget
processes, this variable is included as a control variable in the study.

Literature review
The connection between attitudes and behaviour has been discussed continuously
in the social and behavioural sciences over the past fifty years or so (McBroom &
Reed, 1992). Today's research is less preoccupied with finding out whether there
is any covariation between attitudes and behaviour, and concentrates instead on
the kind of conditions in which such covariation is found. In this research three
models have been developed -- the reasoned action model (Fishbein & Aizen,
1975; Aizen & Fishbein, 1980); the attitude accessibility model (Fazio, 1990); and
the socio-cognitive model (Pratkanis & Turner, 1994). All these models have
enjoyed considerable success in terms of increasing the predictive power of
attitudinal measurements.
First, the concept or object in relation to which the attitudes are to be measured
must be well defined and well integrated into the respondent's cognitive structure
(Fazio, 1989; Pratkanis & Turner, 1994). Secondly, the instrument should be as
specific as possible in relation to the corresponding behaviour (Kraus, 1991,
referred to in Pratkanis & Turner, 1994). The respondents should also possess
knowledge about how to conduct the behaviour (Pratkanis & Turner, 1994).
Moreover, existing norms in the respondents' environments which are in
accordance with their own attitudes will increase the likelihood of a positive
covariation between attitudes and behaviour (Aizen & Fishbein, 1980). Self-
efficacy linked to the behaviour which corresponds to the attitudes (Aizen, 1985)
will also have great potential for influencing the covariation between attitudes and
behaviour. Finally, it is important that the respondents consider the attitudes as
supporting their own egos (Pratkanis & Turner, 1994), or see that the behaviour
leads to an inducement which represents an appraisal of them (Aizen & Fishbein,
1980). This research indicates that if the organizational culture includes negative
attitudes towards MBO, any efforts to increase productivity and efficiency by
using MBO may be hampered. Since according to March & Olsen (1989) the logic
of appropriateness dominates in most public agencies, and MBO is based
essentially on the logic of consequentiality, this may often be what happens.
Negative attitudes towards MBO on the part of employees may therefore be a
significant obstacle to the effectiveness of this management tool.
Since its introduction, the concept of self-efficacy has been increasing its
importance as a significant variable in the prediction of individual behaviour
(Bandura, 1982). Self-efficacy is defined as a persons belief in their own ability to
execute successfully a certain course of behaviour. Research supports
propositions that self-efficacy will influence the choice between engaging or not
engaging in a task, the effort expended in performing it, and the persistence shown
in accomplishing it, as well as the standard of the performance (see Bandura, 1986
and Gist & Mitchell, 1992 for review). Further, it is regarded as a significant
variable in goal-setting theory (Locke & Latham, 1990), and is found to be

4
positively correlated with attitudes (Busch, 1995). The concept has hardly been
applied at all to research in a planning context, although Fallan (1990) found it to
be relevant in the analysis of taxation-planning behaviour. The self-efficacy of the
planner in charge emerged as one of the most important variables for explaining
variations in taxation-planning and the utilization of the firm's turnover potential.
With regard to goal commitment, many definitions have been proposed (see
Tubbs & Dahl, 1991, for a review), but in general a committed person is
envisaged as being persistent in attempts to reach a specified goal. Locke, Latham
& Erez (1988) define goal commitment as attachment to a goal or determination to
reach it regardless of its origin. Regarding the function of goals, research has
concentrated primarily on investigating the connection between goal structure and
performance, and it has been substantially documented that the formulation of
goals has a positive effect on motivation, self-efficacy and performance (Locke et
al, 1981; Mento, Steel & Karren, 1987; Garland et al, 1988; Schunk, 1982; White,
Mitchell, & Bell, 1977). The idea that the degree of commitment to the assigned
goal moderates the effectiveness of the goal-setting procedure is a central
assumption. Research suggests that personal goals will be more strongly related
to organizational performance than assigned goals (Locke & Latham, 1990), that
goal commitment has a positive effect on performance (see Locke & Latham,
1990, for review), and that goal commitment has a positive effect on persistence
behaviour (Allen & Nora, 1995). Woford, Goodwin, and Premack (1992)
conducted a meta-analysis of goal commitment research based on 78 goal-setting
studies. Their conclusion was that not only does goal commitment significantly
affect goal achievement, but commitment to a high-level goal will result in high
achievement, and commitment to a low-level goal will result in low achievement.
Participation has been centre stage for several years in research into budget
processes. Most of this research has focused on the relationship between budget
participation and performance, and the studies present rather conflicting results
about this. Some studies have reported a positive, significant relationship between
budget participation and performance (Brownell, 1981, 1982; Schuler & Kim,
1976), whereas others found no differences in performance between participative
and non-participative budget setting (Kenis, 1979; Steers, 1976). To reconcile
these conflicting results several researchers have adopted a contingency approach.
Contingent or moderating variables which proved significant in explaining the
relationship between participation and performance included locus of control
(Brownell, 1981), environmental uncertainty (Govindarjan, 1986), need for
independence (Hofstede, 1967), task uncertainty (Brownell & Dunk, 1991), and
managerial attitude and motivation (Mia, 1988). The results reported in Mia
(1988) are supported by Rodgers and Hunter (1992), who found that the
productivity of MBO programmes increased as top-management commitment rose
from low to moderate to high. Barki & Hartwick (1994) investigated the
relationship between participation in the development of new information systems
and the attitude towards the new systems. The intention was to test a hypothesis
that users who participate in the system-development process are likely to come to
believe that a new system is good, important and personally relevant. Correlation
analyses provided some support for these theoretical expectations.


5
Method
Subjects
The respondents comprised 119 employees, 48 women and 71 men, in the
department of technical planning and construction in a large Norwegian city. A
questionnaire was distributed by internal mail to all the employees (183 persons),
and the overall response rate was 65 per cent. The respondents' experience in the
department ranged from one to thirty-five years, and the level of education varied
from high school/vocational school certificates to university degrees. Twenty-five
of the respondents held management positions.
The city is one of the largest in Norway and has about 8,500 employees. The
financial problems have been considerable in recent years, and in the annual
budget, much emphasis is given to productivity and the use of resources. In order
to deal with these problems the City Council decided that management by
objectives and performance measurement should be introduced in the
organization. The department of technical planning and construction developed
their first MBO programme in 1994. Each of the eight sections in the department
developed long-term goals for their main activities, and on a basis of the budget
several short-term objectives were formulated within each long-term goal. The
activities that were to achieve the objectives, the person responsible for the
activities, the period in which the activities were to take place and the number of
work-hours that were to be used were also specified. When the questionnaire was
distributed the department had already finished their first MBO programme, and
employees were engaged in developing a plan for the next year.
Even if the long-term goals represented a wide variety of different goal
dimensions, most of the short-term goals and activities focused on productivity
issues: to develop better planning systems, to reduce the time spent on executive
work, to increase productivity in the day-to-day work with the help of information
technology, to finance a certain amount of the expenses by charging fees etc. The
activities in the MBO programme include a broad range of the tasks that the
department has to perform, and most of the employees are directly or indirectly
involved.

Instruments
Self-efficacy. Owen (1986) suggests that self-efficacy can easily be measured and
that it can be used to assess a composite consisting of affect, cognition and
performance. In order to develop an instrument a clearly defined set of skills or
behaviour has to be identified. In this study the behaviour of employees vis-a-vis
the MBO programme was divided into two dimensions: (a) working with formal
management systems, and (b) improving the productivity of their own work. Five
tasks were formulated for each of these dimensions and the respondents were
asked to indicate the degree to which they felt confident about carrying out their
tasks on a five-point Likert scale, ranging from completely unconfident (1) to
completely confident (5). Cronbach's Alpha is .86 (formal management systems),
and .76 (improving productivity). Two composite variables were constructed by
adding up the five items in each of the two dimensions of self-efficacy. The
instrument is reported in Appendix A.
Goal commitment. Goal commitment can be measured by self-reporting or by

6
instruments measuring the discrepancy between assigned and personal goals
(Tubbs, 1994; Wright et al, 1994). A second trend that emerges from the available
theory is to define commitment in terms of an attitude. Attitudinal commitment
exists when a person identifies with a particular organization and its goals (Hall,
Schneider & Nygren, 1979). Wright et al (1994) claim that it is both practical and
empirical problems with discrepancy measures of goal commitment, and they
strongly recommend the use of self-reporting. In the present study a self-reporting
instrument was used. The respondents were asked to state their degree of
agreement with six statements on a five-point scale ranging from Acompletely
disagree@ to Acompletely agree@. The main reason for using self-reporting was
the perceived difficulty of measuring assigned goals relevant to productivity
improvement. In order to analyse the construct validity, a factor analysis was
conducted (Principal-Component analysis, Varimax rotation). This gave a one-
factor solution that explained 43.1 per cent of the systematic covariance among
the items. Cronbach's Alpha is .73. A composite variable was constructed by
adding the six items together and dividing the total by their number. The
instrument is reported in Appendix B.
Participation. As the main purpose of the study was to investigate the
relationship between attitudes towards MBO and the concepts of self-efficacy and
goal commitment, participation was measured by using a global, single-item, five-
point scale, according to which respondents were asked to indicate how far they
had participated in the development of the latest MBO plan.
Attitudes towards MBO. To measure attitudes towards MBO the respondents
were asked to indicate on a five-point scale what they felt about the departments
decision to increase the use of MBO.
Knowledge about the MBO programme. Respondents were asked to indicate on
a five-point scale how much they knew (a) about the structure of the programme;
(b) about the content of the programme; and (c) about the goals of the programme.
Cronbach's Alpha is .91 and a composite variable was constructed by adding the
three items together.
In addition to mapping these variables, the respondents were asked to identify
their positions in the organization (non-manager=0, manager=1).

Results
In order to analyse whether goal commitment and self-efficacy can predict
attitudes to MBO, a regression analysis was conducted, using the concept as a
dependent variable. The chosen independent variables were: goal commitment, the
two self-efficacy concepts, participation and position. All correlations among the
independent variables are lower than .52 - indicating that multicollinearity is not a
crucial problem (see Table I). The regression analyses show that goal commitment
and self-efficacy in improving the productivity of subjects own work are the only
variables which contribute significantly in the regression equation (see Table II).
Individuals with high commitment to productivity goals, and individuals with high
self-efficacy in improving the productivity of their own jobs, have a more positive
attitude to the department's application of MBO as a management tool. Self-
efficacy in working with formal management systems, participation and position
had no significant covariation with attitudes towards MBO.

7

-----------------------------------
Insert table I about here
-----------------------------------
-----------------------------------
Insert table II about here
-----------------------------------
In order to analyse whether goal commitment, self-efficacy and participation can
predict knowledge about the MBO programmes another regression analysis was
conducted (see Table III). The analysis demonstrates that participation and self-
efficacy in working with formal management systems are significantly correlated
with the level of knowledge about the MBO programme. Participation in
particular is a strong predictor with a beta-value of .75. Self-efficacy in improving
productivity, goal commitment and position had no significant covariation with
knowledge about the MBO programme.
-----------------------------------
Insert table III about here
----------------------------------

Discussion
MBO is a method which build on cooperation and aims to improve the
productivity and the efficiency of an organization on a basis of formulated
objectives. It is interesting to observe that commitment to productivity goals and
self-efficacy in improving the productivity of a subjects own work, are the only
variables which correlate significantly with attitudes towards MBO. Individuals
with a positive attitude to the goals whose realization is sought with the help of
MBO, and/or who are very confident that these goals can be realized in their own
jobs, thus display more positive attitudes towards MBO as a management tool.
Self-efficacy in working with formal management systems does not contribute
significantly to the regression equation. This indicates that high self-efficacy in
working with management systems on a more abstract level does not involve a
positive attitude to being managed with the help of such systems. This accords to
some extent with DeBeer (1980), who found that the respondents displayed
positive attitudes to zero-base budgeting as a system, but negative attitudes about
whether it would actually work in practice.
Under the assumption that there is a positive correlation between attitudes and
behaviour, the result that participation is not positively correlated with attitudes
towards MBO is in accordance with previous research findings, suggesting that
the relationship between budget participation and performance is moderated by
other variables. According to Alpin and Schoderbeck (1976) MBO is more
successful if all three of its components -- participation in decision making,
relevance of feedback and top-level goal-setting and support -- are fully
introduced in the organization. The lack of correlation between participation and
attitudes towards MBO in the present study may indicate that two of these
conditions are not satisfied in this programme. The results provide no support for
the hypothesis presented in Barki and Hartwick (1994), that user participation is
one of the antecedents of user attitude.

8
The finding that participation and self-efficacy in working with formal
management systems are good predictors of knowledge about the MBO
programme, was a more predictable one. Individuals with strong self-efficacy in
this direction tend to get involved more easily in all processes dealing with formal
planning systems, and in this way, they also acquire greater insight into MBO. By
participating they will increase their knowledge about all aspects of the MBO
programme.
It is interesting to note that managers do not have more positive attitudes
towards MBO or more knowledge about the MBO programme than non-
managers. This finding suggests that the department has not succeeded in creating
the necessary commitment to the programme on management=s part. According to
Rodgers and Hunter (1992), this may hamper the success of the MBO programme.
The study indicates that in order to obtain a positive impact on productivity as a
result of the MBO programme, the self-efficacy of the employees in improving
productivity has to be increased. According to Bandura, several factors affect self-
efficacy. The most important source of improvement consists in accomplishment
in actual performance. The experience of success in performing a task will
increase the self-efficacy associated with that task (Bandura, 1982; Hackett &
Campbell, 1987; Campbell & Hackett, 1986). Seeing others succeed or fail is a
second experience that can affect self-efficacy (Bandura, 1982; Gist, 1987; Gist,
Schwoerer & Rosen, 1989; Schunk, 1981 and 1982). These findings suggest that
management should be able to increase the self-efficacy among employees by
introducing projects in which participants have an opportunity to experience their
own or other people=s success. According to the results of the present study,
training aimed at increasing the participants= self-efficacy in working with formal
management systems will not be enough on its own. The results indicate that in
order to be successful in creating positive attitudes towards MBO, the training
programme has to focus on ways of increasing the self-efficacy of the employees
in dealing with the goals specified in the MBO programme.
Changing the goal commitment of the employees may be more difficult. All
organizations, especially in the public sector, are expected to fulfil a wide range of
often contradictory goals, and a heavy emphasis on productivity goals may have
negative consequences for important stakeholders. The results of the present study
indicate that in order to create more positive attitudes towards MBO, it is
important that employees feel committed to the goals that are specified in the
programme. If several goal dimensions are included in the MBO programme --
service, quality, productivity, working environment, job enrichment etc, every
employee will probably feel committed to at least some of these goals. Further
research is needed to find out whether this would result in a more overall positive
attitude to the MBO programme. After making a review of research findings,
Locke and Latham (1990) concluded that goal commitment can be affected by
instructions from figures of authority, by peer influence, by the public nature of
the commitment, by incentives and reward systems and by goal instrumentality
and goal valence -- all of which suggests that it should be possible to increase goal
commitment among employees. More research is needed to study the question of
commitment to different goals, and the self-efficacy attaching to the tasks that
have to be completed to fulfil these goals in the public administration.

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Measuring goal commitment and self-efficacy is not enough alone to give a
comprehensive idea of the degree to which the employees' behaviour is oriented
towards these goals. To understand more about what employees actually do in
their day-to-day jobs, a broader analysis needs to be conducted. It should measure
organizational commitment, cognitive structure, dominating rationality norms,
organizational culture etc. Within this framework, goal commitment and self-
efficacy should constitute central dimensions.

10
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14
Appendix A

Self-efficacy

A: Formal management systems
B: Improving productivity




Please indicate the degree to which you feel confident
to carry out each task by circling a number from 1
(completely unconfident) to 5 (completely confident).

Comple
tely
unconfi
dent



Compl
etely
confide
nt

A

Analyse accounts and budgets

1

2

3

4

5

A

Discuss new management accounting systems

1

2

3

4

5

A

Create routines for controlling productivity

1

2

3

4

5

A

Take part in the process of budgeting

1

2

3

4

5

A

Take part in a discussion on budget deviations

1

2

3

4

5

B

Improve the productivity of your own work

1

2

3

4

5

B

Find new ways of working which yield a better
utilization of the resources in your own department

1

2

3

4

5

B

Find new labour-saving methods in your own
department

1

2

3

4

5

B

Utilize time/resources better in your own work
situation

1

2

3

4

5

B

Find areas within your own department within which
the use of resources can be cut in a responsible manner


1

2

3

4

5


15

Appendix B

Commitment to productivity goals


Please indicate the extent of your
agreement with each statement by circling
a number from 1 (strongly disagree) to 5
(strongly agree).

Strongly
disagree



Strongl
y agree

Productivity goals should never dominate
public agencies

1

2

3

4

5

Dealing with budgets is a very interesting
part of my job

1

2

3

4

5

Key figures that indicate the level of
productivity is very important

1

2

3

4

5

Analysing and discussing budget
discrepancies is a waste of time

1

2

3

4

5

The utilization of equipment is of minor
interest in public agencies

1

2

3

4

5

I would rather not test new methods whose
only goal is to increase productivity

1

2

3

4

5



16
Table 1 Correlation matrix - independent variables


Variables

1

2

3

4

1. Self-efficacy - formal
management system
2. Self-efficacy - improving
productivity
3. Goal commitment
4. Participation
5. Position

-
.33
.52
.52
.32


-
.26
.20
.18



-
.42
.26




-
.45


Table II: Regression analyses - attitudes towards MBO

Predictor

Beta

T

Sig T

Attitudes towards MBO
Self-efficacy: Formal management system
Self-efficacy: Improving productivity
Goal commitment
Participation
Position



.07
.37
.33
.09
.11



.7
4.4
3.5
.9
1.1


.474
.000
.000
.886
.243
R Sq Adj.: .34

17
Table III: Regression analyses - knowledge about the MBO programme

Predictor

Beta

T

Sig T

Knowledge about the MBO program
Self-efficacy: Formal management system
Self-efficacy: Improving productivity
Goal commitment
Participation
Position



.15
.09
-.11
.75
.00


2.1
1.4
-1.6
10.
5
-.0


.037
.157
.104
.000
.929
R Sq Adj.: .65

18