This study extends the stream of participative budgeting literature and, specifically, the work of Frucot and Shearon (1991). This study employs an expanded version of the path model introduced to this literature by Kren (1992) to examine and compare the budget participation-performance relationship for U.S. and Mexican mid-level managers. The expanded path model allows the examination of both the direct effects of budget participation on performance and the indirect effects of budget participation on performance that run through job satisfaction and job-relevant information. The primary findings of this study are that while there are strong associations between budget participation and performance for both U.S. managers working in the U.S. and Mexican managers working for U.S.-controlled maquiladoras in Mexico, the causal mechanisms connecting budget participation to performance are quite different between these two groups. The information-communication aspect of the budget participation-performance relationship is much stronger among our Mexican managers and strongest among our Mexican managers who may face the greatest psychic distance from their U.S. parent companies: those who are not bilingual, and/or those who are supervised by U.S. nationals.

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