THE EFFECT OF BUDGETING PROCESS ON ORGANIZATIONAL PERFORMANCE IN SELECTED FIRMS IN MOGADISHU SOMALIA

Abstract

The purpose of this study was to investigate the relationship between budgeting and performance remittance companies in Mogadishu, Somalia. The objective of this study was: To examine the influence of formalized budgeting planning on firm’s performance.To analyze the influence of formalized budgetary control on firm’s performance. To examine the influence of formalized budgetary participation on firm’s performance.To investigate the relationship between budgeting and firms performance The study collected data from seven remittance companies using questionnaires. The target population is 23 remittances operating in Mogadishu-Somalia, selected 15 of them each one selected 4 respondents. The sample size comprised of 60 which means 15 firms times each one selected 4 respondents.The researchers usedjudgmental sampling technique of non-probability sampling to select 60 respondentsfrom those companies. Data were analyzed using descriptive statistics of frequency; mean standard deviation and correlation analysis methods.The findings of this study revealed the relationship between budget planning and organizational performance is positive (r=0.741, p=0.000) and statistically significant. This implies that an improved organizational performance is associated with an increase in budget planning. The study results also found out there is positive relationship between budgetary control organizational performance which statistically significant (r=0.757, p=0.000).The correlation findings further showed that there was positive correlation between budget participation and organizational performance which was significant (r=0.848, p=0.000).Meaning that these variables tend to increase together that is, increase budget participations associated with increase in organizational performance. The study suggests that remittance companies should adopt participative budgeting and give rewards to talented employees if they meet budget goals.