The role of psychological capital in moderating the effect of budgetary participation on local government performance

Type of the article: Research ArticleAbstractThis study aims to examine the effect of budgetary participation, organizational commitment, motivation, and budget transparency on local government performance, with psychological capital as a moderating variable. Budgetary participation refers to the involvement of local government employees in the budgeting process, while psychological capital reflects their optimism, resilience, and confidence in decision-making. This analysis was conducted in Central Java, Indonesia, from June to August 2024 using a quantitative approach. A structured survey was conducted by distributing questionnaires to respondents consisting of 250 employees in local work units involved in financial management, policy implementation, and service provision. After being selected based on their professional knowledge and direct involvement in the governance and budgeting process, 221 respondents were considered valid. Strict ethical guidelines were adhered to in order to protect participants and maintain the integrity of the research process. The results show that budget transparency and motivation significantly improve government performance. Thus, both are important in the governance process. Psychological capital strengthens the influence of budgetary participation, organizational commitment, and budget transparency on local government performance. Motivation has a direct and substantial contribution to local government performance without being moderated by employee psychological traits such as optimism and self-confidence. Employees' motivation drives their performance regardless of their psychological capital. This is in contrast to budgetary participation and organizational commitment, which require psychological support to enhance their effects. This study contributes to governance research in highlighting the psychological aspects of budgetary participation, organizational commitment, and transparency.