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An examination of budgetary slack behavior reveals that managerial characteristics and the economic environment may contribute to the failure of budgetary control systems.Large management‐controlled firms that operate in industries with high barriers to entry behave as if they allocate more slack resources when compared with owner‐controlled firms of similar size and market power. The results confirm that accounting operating‐income numbers reflect manifestations of slack behavior in the budgetary process. Management‐controlled firms in particular seem to act as if they fail to release and redistribute slack resources. It is concluded that budgetary slack behavior points to failures in the organization design that may lead to inefficient allocation of resources and to inferior profit performance.

The importance of motivation in the managerial control process has been well noted in the accounting literature. However, despite its emphasis on motivation, the accounting literature says little about the specific relationships between motivation and accounting control systems.This paper will present an explicit, systematic statement of these relationships by means of a detailed comparison and synthesis of two previously unrelated models. One is a conventional accounting model of control, and the other is a comprehensive behavioral model of motivation. Our aim is to integrate behavioral concepts with accounting applications in order to work towards solutions of important problems involving motivation and management control systems.