How does performance-based budgeting enhance sustainable performance? A mediated-moderated model of innovation and information quality

Abstract

Purpose Sustainable performance is increasingly critical in many sectors, particularly in the oil and gas industry, where strategic resource allocation and innovation are essential. Performance-based budgeting links funding to measurable outcomes; however, its effectiveness depends on the quality of accounting information and its ability to foster technological innovation. Guided by goal-setting theory (GST), this study aims to explore the direct and indirect effects of performance-based budgeting on sustainable performance through technological innovation and examines the moderating role of accounting information quality in Iraqi oil companies. Design/methodology/approach Data were collected via a questionnaire administered to 317 managers in Iraqi oil and gas companies. Partial least squares structural equation modeling (PLS-SEM) and moderated mediation analysis were employed to test the research hypotheses. Findings The results reveal that performance-based budgeting positively influences both sustainable performance and technological innovation. Moreover, technological innovation partially mediates the link between performance-based budgeting and sustainable performance. The findings also confirm that accounting information quality strengthens the relationship between performance-based budgeting and technological innovation, with higher levels of information quality enhancing innovation outcomes. Originality/value This study offers a novel contribution by integrating budgeting, innovation and information quality into a single mediated-moderated framework. It provides fresh insights into how budgeting reforms and high-quality information systems jointly foster innovation-driven sustainable performance in Iraq’s oil sector.

The authors' abstract, as published at the source. International Journal of Innovation Science, 2025 · DOI ↗