Participation and Performance in Capital Budgeting Teams.

Abstract Increasingly, organizations rely on cross-functional teams in the development of capital budgeting projects. To date, no studies appear to have examined conditions that affect team performance. Using structural equation analysis, this study of 177 managers in 55 capital budgeting teams examined the mediating effects of information sharing and budget perforrnance emphasis between team budget participation and performance. A structural model provided a strong fit of the hypothesized relationships. The posited mediating effects were significant, suggesting the importance of contextual variables upon team performance. The effect of hierarchical controls on team performance was also examined. No performance effects were found.