Does Performance-Based Budgeting Have a Correlation with Performance Measurement System? Evidence from Local Government in Indonesia

Abstract

This study aimed to empirically test some variables related to Performance-Based Budgeting (PBB) and Performance Measurement System (PMS) implementation in the local government, namely Special Region of Yogyakarta, Indonesia. This study applied the mixed-methods approach with sequential explanatory strategy (QUANTITATIVE to Qualitative). Quantitative stage was conducted by testing the hypothesis using the Structural Equation Model (SEM) approach. On the qualitative stage, the interview was conducted to dig more information on the unsupported hypothesis. From the result of the hypothesis testing, it was discovered that the limitation of information system had a negative influence, while education had a positive influence towards the effectiveness of PBB. Furthermore, the effectiveness of PBB had a positive influence towards budget absorption, and the accountability also had a positive influence towards the use of performance information to practice the arrangement of PPB. Meanwhile, the qualitative analysis produced the finding that there were practices of PBB that could still be done manually and it was not supported by information technology. Besides, the implementation of PMS and PBB was more because of the coercive pressure rather than consciousness of normative apparatus.

Keywords

• local government
• performance accountability
• performance-based budgeting
• indonesia