Introduction

For many organizations, the creativity of their employees is a critical factor for long-term success (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}). Thus, they face a dilemma in which the specific nature of creative production requires a substantial use of formal control, but this control can undermine creativity (^{Grabner & Speckbacher, 2016}). However, dysfunctional behavior requires formal control to effectively coordinate and regulate employee behavior (^{Adler & Chen, 2011}).

In this context, budget, as a central figure in the Management Control System (MCS), allows goals to be aligned with employee behavior and supports efficiency (^{Speklé, Elten & Widener, 2017}), as well as facilitates creativity, leads the organization to achieve expected competitiveness. In particular, understanding how an organization can use MCS to support creativity has emerged as an important research issue.

The literature on organizational behavior and social psychology indicates that freedom at work allows individuals to be creative and, on the other hand, rigid controls can become an impediment to creative thinking (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}). The accounting literature suggests that the way control is perceived by individuals may affect their actions, i.e., how they communicate constraints and limits, and whether employees believe they have the power to determine their choices in the development of activities (^{Silva & Lavarda, 2020}).

In this sense, MCS provides employees with a sense of empowerment, tends to provide a sense that their choices and expectations can guide their efforts. Thus, it determines that self-regulated behaviors need support for empowerment, as discussed by the Self-Determination Theory (^{Sierens, Vansteenkiste, Goossens, Soenens & Dochy, 2009}). It is important to understand the effects of diagnostic and interactive use of budgeting on their influence on empowerment and creativity separately.

Recent evidence indicates that MCS can favor empowerment and creativity (^{Adler & Chen, 2011}; ^{Marginson, McAulay, Roush & Zijl, 2014}; ^{Grabner & Speckbacher, 2016}; ^{Cools, Stouthuysen & Van den Abbeele, 2017}). Information from the Management Control System (MCS) can be used in diagnostic form to ensure that the organization is on the right track to achieve its intended objectives, but can also be used in an interactive way to ensure that the information and concerns of top management are shared vertically (^{Müller-Stewens, Widener, Moller & Steinmann, 2019}).

^{Speklé, Elten and Widener (2017)} found that the diagnostic system does not provide support and autonomy structure that allows employees freedom of choice in selecting their courses of action (^{Simons, 1995}). However, ^{Cools, Stouthuysen and Van den Abbeele (2017)} argue that this type of control, characteristic of this system, stimulates creativity. Thus, this study understands that the diagnostic control system may not be perceived as negative constraints by employees, but rather as a challenge that presents an interesting problem that motivates thinking of unusual solutions within its course of action (^{Silva & Lavarda, 2020}).

In this context, this study had the following research problem: What is the influence of different ways of using the budget on the empowerment and creativity of managers? The study aims to check the influence of ways of using the budget on the empowerment and creativity of managers.

The study is justified by expanding the theoretical discussions on the subject, presented by ^{Grabner and Speckbacher (2016)}, about the effect of the diagnostic and interactive use of budgeting on creativity and empowerment. The results indicate that the diagnostic use of budgeting is important for creativity and empowerment of employees even in pursuit of pre-established goals. On the other hand, it has been found that interactive use can compromise the sense of empowerment and creativity.

In the practical field, the study is justified by discussing the uses of interactive control and diagnosis in the context of information technology organizations regarding employee empowerment and creativity. The results show that it is not useful to make a choice between having an environment that encourages creativity or having adequate control. Both can coexist.

Theoretical foundation

Development of research hypotheses

Earlier research supports the argument that employees become more creative when they feel empowered and realize that they have freedom to perform tasks (^{Cools, Stouthuysen & Van den Abbeele, 2017}). The consequence of this is that if the organization is interested in stimulating creativity, the work environment must be based on perceptions of empowerment. ^{Su, Baird and Tung (2022)} state that creativity results from employees’ belief that they have the freedom to generate new ideas and the confidence that their ideas are valued, being a sign of employee empowerment.

Thus, if external regulation is imposed, which makes part of behavior self-regulated, employees will not have their sense of command impaired (^{Ryan & Deci, 2000}). Consequently, the management control system is designed and presented in such a way that it is internalized and assimilated, which supports and enhances self-determination and thus perceptions of empowerment. In this way, it requires the management control framework to support autonomy (^{Deci & Ryan, 1987}) and provide an adequate framework for the decision problems that individuals face (^{Sierens, Vansteenkiste, Goossens, Soenens & Dochy, 2009}). Thus, this study raises the following hypothesis:

H1: Managers’ sense of empowerment positively influences their creativity.

The study argues that the use of the budget will create an environment that is characterized by self-management and freedom within the stipulated limits, which promotes empowerment (^{Simons, 1994}). ^{Mundy (2010)} supports this argument by presenting that the levers of control are important to direct and train managers and employees simultaneously. Using budgeting in a diagnostic and interactive way provides clarity and understanding of the work environment. Thus, the management control system that makes use of the same levers can facilitate creativity while restricting employee behavior (^{Mundy, 2010}).

Recent studies have provided empirical evidence that when different controls have different weights in the management control system, their combinations support creativity (^{Kruis, Speklé & Widener, 2016}; ^{Bedford, 2015}). Recent research has focused on how combinations of different levers of control can help creativity and innovation (^{Henri, 2006}; ^{Widener, 2007}; ^{Mundy, 2010}; ^{Bedford, 2015}; ^{Kruis, Speklé & Widener, 2016}; ^{Curtis & Sweeney, 2017}; ^{Janka & Guenther, 2018}; ^{Müller-Stewens, Widener, Moller & Steinmann, 2019}). Thus, the following hypothesis is proposed:

H2: The use of the budget in diagnostic or interactive ways increases the creativity of managers.

This study proposes that the use of the budget in a diagnostic and interactive way supports autonomy. Diagnostic use communicates the goal in critical performance measures that guide behavior and provides feedback to facilitate employee learning (^{Simons, 1995}). This control emphasizes responsibility for results, which can motivate employees to act and promote know-how. Interactive use communicates the concerns of key managers across all organizational units. These employees are aware of the potential opportunities and threats that may arise from meeting their goals (^{Speklé, Elten & Widener, 2017}).

Research in social psychology and organizational behavior has addressed various vectors of creativity (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}). These studies concluded that senses of autonomy are important, but the work environment itself also plays a significant role (^{Amabile & Pillemer, 2012}). In addition to providing opportunities for employees to believe that they can make choices about their actions within defined boundaries (as presented in empowerment), organizational and supervisory incentives were considered an indispensable stimulant for creativity in organizational environments (^{Su, Baird & Tung, 2022}).

Thus, giving explicit instructions, recognizing creative thinking, encouraging discourse that supports creativity, idea generation, valuing creativity are all aspects of the organizational incentive needed to stimulate creativity (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}). In this sense, organizational empowerment can provide a creative thinking environment, which makes the diagnostic use of budgeting positively associated with creativity, that is, even in companies that use the restrictive budget, but managers have a sense of empowerment, creativity continues to prevail.

H3: The use of the budget in diagnostic or interactive ways, moderated by empowerment, increases managers’ creativity.

In the interactive use, budgeting allows for the exchange of information in an environment where individuals are encouraged to challenge the status quo, participate in debates and dialogues, and find creative and innovative solutions. Thus, it communicates strategic uncertainties vertically throughout the organization and provides focus for employee creativity (^{Speklé, Elten & Widener, 2017}). In the diagnostic use, there is not only a limiting influence regarding the behavior of managers, since the monitoring process highlights problems that motivate them to achieve their goals (^{Mundy, 2010}).

^{Sierens, Vansteenkiste, Goossens, Soenens and Dochy (2009)} elucidate that support for autonomy includes the provision of choice in conducting work activities, while the provision of structure includes the establishment of constraints and expectations. These factors can have a positive effect on organizations if employees understand that their actions and tasks help the organization with decision-making information that affects overall business results (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}). In the meantime, employees generally realize that diagnostic use of the budget increases freedom, not only imposes constraints.

^{Su, Baird and Tung (2022)} clarify that goal setting can encourage problem solving and experimentation. Moreover, ^{Grabner and Speckbacher (2016)} show that predefined goals are used for performance evaluation in creative environments. Thus, working toward the predefined goal gives the creative team the autonomy to use all of their creative ideas to evaluate required inputs, desirable behaviors, and input-output relationships (^{Cools, Stouthuysen & Van den Abbeele, 2017}).

It is proposed that this is a consequence of the creation of an environment that provides support and structure for the autonomy necessary to promote intrinsic motivation and self-regulating behaviors, as opposed to an environment characterized as “controlling”, associated with empowerment (^{Simons, 1995}). Employees may have the opportunity to make choices about their actions with defined limits (^{Amabile, Conti, Coon, Lazenby & Herron, 1996}).

H4: The use of the budget in diagnostic or interactive ways increases the empowerment of managers.

In an enabling (interactive) work environment, it is easy to promote creative behavior, also emerging the understanding that freedom can affect the level of empowerment of managers. ^{Hall (2008)} indicates that the use of a diverse set of performance measures in the various business units, makes managers experience greater freedom, autonomy and opportunity to perform their tasks.

^{Marginson, McAulay, Roush & Zijl (2014)} found a positive result between the interactive use of non-financial performance measures and self-determination, suggesting that an interactive use of the budget may enhance the sense of empowerment. Empowerment is associated with intrinsic and self-determined motivation.

Using budgeting in a diagnostic and interactive way creates the work environment that employees need to be creative. The diagnostic use, goals, objectives and performance limits need not be viewed as negative constraints to its achievement, but can, in the presence of interactive supportive control, be perceived as challenges that only make thought-provoking problems, stimulating individuals to think of unusual solutions and non-standard approaches (^{Burroughs, Dahl, Moreau, Chattopadhyay & Gorn 2011}; ^{Cools, Stouthuysen & Van den Abbeele, 2017}).

^{Cools, Stouthuysen and Van den Abbeele (2017)} concluded that diagnostic use does not stifle creativity but, in contrast, can stimulate creativity. Goals, objectives, and constraints lead to structuring the decision problem so that creative thinking is precise, because standard solutions will not fit all decision parameters (^{Speklé, Elten & Widener, 2017}). For the authors, they can also serve to provide guidance and improve individuals’ understanding of action-outcome relationships, which further guides creative behavior.

Organizations seeking to facilitate creativity should create an information exchange process that encourages and supports creativity. The empirical evidence found by ^{Gong, Cheung, Wang and Huang (2012)} suggests that information exchange is necessary for teams to be more creative. ^{Simons (1994)} argues that the diagnostic and interactive levers of control create the work environment that employees need to be creative, which can provide a sense of empowerment (^{Marginson, McAulay, Roush & Zijl, 2014}). In this sense, the following hypothesis is proposed:

H5: The use of the budget in diagnostic or interactive ways, moderated by creativity, increases the empowerment of managers.

Source: Prepared by the authors (2022)

Figure 1 Theoretical model of the study. 

It is observed that the use of the budget, in a diagnostic and interactive way, has an impact on creativity as well as on empowerment and, subsequently, on creativity.

Methodological path

To analyze the relationship between the use of the budget and empowerment and creativity, we adopted a descriptive research on the objective, survey on procedures and quantitative on the research problem.

This study applied a questionnaire to managers of 638 organizations belonging to the Association of Brazilian Information Technology Companies - ASSESPRO. Therefore, the research population is the managers of the companies associated the ASSESPRO. Data from these companies were found through the website of each regional ASSESPRO (São Paulo, Bahia, Sergipe, Pernambuco, Paraíba, Sergipe, Rio Grande do Sul, Brasília). It used a non-probability accessibility sample of the 100 responses received.

The choice of the information technology sector is due to the need for constant creativity in management that stimulates the innovation required in the market that changes at an incredible speed. It is a sector that also requires managers with a sense of empowerment to deal with the pressures from competition and market dynamics. Finally, this sector is linked to research and development projects that require high investments and a very dynamic and efficient budget control. In this sense, the information technology sector becomes prominent in establishing a relationship between the ways in which the budget control system is used and the enactment of incentives for creativity, as well as the empowerment of managers.

Data collection for this investigation was performed by the Center for Studies and Research in Administration (CEPA), an agency linked to the School of Administration of the Federal University of Rio Grande do Sul (EA/UFRGS). The survey instrument was applied by three interviewers, by telephone, during the months of December 2018 and February 2019. This data collection strategy by a company specialized in survey is widespread in management research in the accounting area.

Table 1 lists the characterization of respondents (age, time in the function, time in the company, number of supervised employees, number of employees and category of responsibility).

Table 2 shows that the mean time in the function of managers was 7.5 and the mean number of supervised employees was 10.06. Additionally, it is noteworthy that most companies are small and medium-sized, respectively 52.04% and 30.61% study sample. Respondents are responsible for profit and loss, of revenue, of costs and for budget, respectively, 16.04%, 19.13%, 33.09% and 30.86%.

The research instrument consists of four blocks with 20 questions. These constructs are listed in Table 2, which presents each variable.

The first block includes the construct of the diagnostic and interactive use of the budget, with 10 questions, based on ^{Henri (2006)} and tested by ^{Widener (2007)}, ^{Speklé, Elten and Widener (2017)}. The second block covers the empowerment construct with 5 questions. The first three questions were developed by ^{Spreitzer (1995)} and based on ^{Hartline and Ferrel (1996)} and ^{Lambe, Webb and Ishida (2009)}, ^{Speklé, Elten and Widener (2017)} included two additional questions. In the third block, there were 5 questions about creativity created by ^{Farmer, Tierney and Kung-McIntyre (2003)} and tested by ^{Speklé, Elten and Widener (2017)}. These questions are described in Table 3. The fourth block consisted of respondent characterization questions.

The constructs were treated using factor analysis to delimit the formation of the dimensions of empowerment, creativity, diagnostic use of budgeting and interactive use of budgeting. With the established dimensions, multiple linear regression was applied to set the relationships between the dimensions as outlined in the research design. SPSS software was used for all statistical models.

Results analysis and discussion

First, we present the descriptive statistics of the variables used in the research to delineate the object of study, as listed in Table 3.

The mean age of respondents is approximately 39 years, with mean time in the function and also in the company of 7 years. These managers supervise a mean value of 10 people. Regarding the dimensions, the results indicate that the diagnostic use of the budget is greater than the interactive use and that managers have more creativity than the sense of empowerment.

To proceed with the results, we have the factor analysis of all sets of the variables searched. Thus, four factor analysis models were elaborated, one for each dimension (research variable), seeking to confirm if there are different factor groupings. The KMO and Bartlett tests evidence the validity of the factor analysis models, as listed in Table 4.

Table 4 evidences the validity of factor analysis in all studied dimensions. It is concluded that there is validity in the groups of empowerment, creativity, diagnostic use the of budget and interactive use of the budget by Kaiser measure greater than 0.600 and Bartlett test presented significance at 5% level in all models. Subsequently, the result of the principal component analysis of the four dimensions of the research is listed in Table 5.

The results of the factor analysis indicate that the five questions that initially form the empowerment dimension were grouped into a single factor, with information percentage of 61.80%. In the creativity dimension, the five questions used for its measurement were grouped into one component, with information percentage of 57.33%. Regarding the diagnostic use of the budget, it is concluded that the five questions of this grouping are consolidated in a single component with information percentage of 53.36%. Finally, the interactive use of the budget is consistent, presenting in the factor analysis the formation of a single component with an information percentage of 37.67%.

Table 6 lists the results of the factorial groupings by the Varimax rotated component matrix.

Table 5 indicates that the empowerment component confirms the existence of only one factor with grouping of five questions. The same is true for the component of creativity, diagnostic use, and interactive use. From the confirmation of the research dimensions, we sought to confirm the research hypotheses. For that, we used multiple linear regression models. Table 7 lists the results of the influence of the use of the budget and empowerment on managers’ creativity.

The results indicate that the diagnostic use of the budget increases the creativity of the managers, confirming hypothesis 2. In this sense, the budget used to diagnose and correct distortions makes the managers find creative alternatives to improve the performance and reach the organizational goals, as already stated by ^{Sierens, Vansteenkiste, Goossens, Soenens and Dochy (2009)}. On the other hand, the interactive use of budgeting, in isolation, did not influence managers’ creativity, contrary to the evidence exposed in part of hypothesis 2. It is concluded that the freedom and dialogue promoted by the interactive use of budgeting does not have generated increased creativity of managers, contrary to the arguments of ^{Marginson, McAulay, Roush and Zijl (2014)}.

Moreover, the findings suggest that empowerment is reflected in increased manager creativity. This proves that individuals become more creative when they feel important within the organization and when they have autonomy in performing their tasks (^{Sun, Zhang, Qi & Chen, 2012}). It is concluded that the work environment can stimulate the creativity of individuals, supported by the consolidation of managers with empowerment capacity, which confirms hypothesis 1

Besides that, evidence indicates that empowerment has a moderating effect on the relationship between budget use in diagnostic and interactive ways on managers’ creativity, which confirms hypothesis 3. In diagnostic use, the pre-set goal can encourage problem solving through the use of creative ideas (^{Cools, Stouthuysen & Van den Abbeele, 2017}). In interactive use, budgeting can enable information sharing in an environment where employees are motivated to challenge the status quo, participate in discussions and dialogues, and find creative and innovative solutions (^{Speklé, Elten & Widener, 2017}).

Finally, additionally, there was evidence that managers with less education have greater creativity. Therefore, it is considered that schooling can make managers more critical about daily attitudes, also makes them less susceptible to creativity because they fear the failure of their idea.

Table 8 lists the results of the influence of the use of the budget and creativity on the empowerment of managers.

The results indicate that the diagnostic use of budgeting increases the empowerment of managers, which corroborates hypothesis 4. It is proved that the constraints caused by little dialogue and budget imposition make managers more empowered in the organization. In addition, constant monitoring of budget activities can centralize important information to managers of organizations, bringing greater empowerment to decision making.

The results suggest that the diagnostic use of the budget positively influences the empowerment of managers. On the other hand, the interactive use of the budget had no influence on the increase in managers’ empowerment. This result indicates that using the budget to achieve the set goals can provide empowerment for managers and, on the other hand, managers cannot have the same power if the budget is used to promote organizational dialogue. This can be because dialogue and interaction cause other ideas to be implemented and power not to be centralized in a single individual, who is usually the own sector/organization manager. Further, interactive use can distract employees from their immediate goals and allow them to lose focus on overall goals (^{Müller-Stewens, Widener, Moller & Steinmann, 2019}).

Moreover, the results indicate that creativity generates new ideas and attitudes of trust that enable the sense of empowerment in managers, which confirms the evidence of ^{Alge, Ballinger, Tangirala and Oakley (2006)} and ^{Ryan and Deci (2000)}. In this sense, it is also proven that the diagnostic or interactive use of the budget, moderated by creativity, enhances the empowerment of managers. This result confirms hypothesis 5, which meets the statements of ^{Marginson, McAulay, Roush and Zijl (2014)}. Thus, it is concluded that managers’ creativity can overlap even the way budget is used over management empowerment.

Additionally, regarding the control variables, the findings indicate that only gender had a positive influence on organizational empowerment. Thus, the female gender has greater organizational empowerment.

Final considerations and recommendations

From the study, it is concluded that the ways of using the budget influence the empowerment and creativity of managers. The feeling of empowerment increases the managers' creativity (Hypothesis 1). In this circumstance, creativity becomes an empowerment function that is also explained by the managers' own creativity.

From the theory of self-determination, it is possible to conclude that the ways of using the diagnostic and interactive budget can exert action stimuli to influence the intentional behavior of individuals within organizations (Hypotheses 2, 3 and 4). This finding is confirmed by the fact that the diagnostic use of the budget increases the feeling of empowerment and also the creativity of managers.

This also applies to the stimulus for a given behavior, sometimes depending on the purpose and interaction with other behavioral aspects (Hypothesis 5). Thus, the interactive use of the budget needs to be associated with the managers' creativity to generate a feeling of empowerment, and the opposite also occurs, where the interactive use of the budget has to be associated with the feeling of empowerment to increase the managers' creativity.

Theoretical discussions on the subject have been expanded, which provides empirical support to the suggestions of previous investigations, such as ^{Grabner and Speckbacher (2016)} and ^{Cools, Stouthuysen and Van den Abbeele (2017)}, regarding the role of the diagnostic use of budgeting in creativity and empowerment. The study also provides an alternative view of the influence of the interactive use on empowerment and creativity, which was different from that proposed by ^{Sun, Zhang, Qi and Chen (2012)} and ^{Gong, Cheung, Wang and Huang (2012)}.

The research provides evidence of the influence of different ways of using budget on managers’ empowerment and creativity. In this respect, it offers evidence that diagnostic use is essential for employees’ creativity and empowerment even when pursuing a defined strategy/goal. Also, it has been shown that the interactive use of budgeting can compromise employees’ sense of empowerment.

This study emphasizes the importance of using interactive and diagnostic control in the context of information technology organizations to facilitate employees’ empowerment and creativity. It was concluded that simultaneous use boosts empowerment and creativity to achieve organizational strategy and, consequently, develops the sense of empowerment and creative ideas for problem solving and experimentation.

From this perspective, it is unnecessary to make a choice between having an environment that encourages creativity and having adequate control. Managers can implement MCS that creates an information-rich environment conducive to creative thinking while maintaining organizational control.

The work has limitations. The relationship between the diagnostic and interactive use of the budget, empowerment and creativity was elaborated, in which the research strategy was based on the perception of the respondents to the questions that were presented. There is the limitation of only involving organizations from a particular sector.

As a suggestion for further studies, a case study can be done in these organizations so that data triangulation can ensure the results discussed in this study that was based on the respondents’ perception of the research instrument. It is also suggested to investigate the influence of the diagnostic and interactive use on the different types of creativity (expected and responsive) and the empowerment of employees/managers.