Theoretical Framework

To further build up and develop the objectives of this paper, the researchers

scrutinized relevant theories and analyzed their key aspects that would support the

study. Figure 1 presents the connection of the three theories which directly pave the

way for making an analysis on the budget practices of student organizations at

University of Batangas and its effect to their operation.

Goal Setting
Theory of
Motivation

Analysis of Budget Practices of

Systems
Approach Student Organizations at University of
Theory Batangas and Its Effect to Their
Operation

Resource
Dependency
Perspective
on Budgets

Figure 1
Theoretical Paradigm on the Analysis of Budget Practices of Student
Organizations at University of Batangas and Its Effect to Their Operation

From the given theoretical paradigm in Figure 1, the first examined theory is the

Goal Setting Theory of Motivation. According to Muizzuddin et al. (2017), it is a

prominent principle in the field of financial literacy which was proposed by Edwin Locke
in 1968. It was noted that setting goals and objectives is fundamentally related to task

performance and execution, thus linking it to an individual's behavior with regard to

financial planning and budget preparation. This idea has been proven to be a key and

reliable predictor of a person's level of financial literacy as well as his or her dedication

to achieving predetermined objectives in terms of personal financial management. It

explained that a person must construct specific goals before the budget creation

process in order to be motivated and attain a feedback or result at the end of execution.

A principle presented by the theory is the formulation of SMART (specific, manageable,

achievable, realistic, and time-bound) goals. In a financial viewpoint, the composition of

a budget should entail SMART goals as these would project a more feasible budget

which could actually serve as a guide for a person, considering the personal needs and

economic factors surrounding the individual.

In the course of the present study, this theory provided a groundwork on creating a

realistic and comprehensive budget process for student organizations. By following the

principle of SMART goals included in the theory, considering the funds, and applying

financial knowledge in allocation, they would be able to come up with the objectives and

purpose of the organization’s budget first. With the proposed standardized budget

process, the student organizations will be able to have a systematic flow in budgeting

which will reflect in their future endeavors.

On the other hand, Toole (2015) revealed that Systems Approach Theory is

concerned with how diverse elements of an organization—people, technology, formal

structure, physical setting, and environment—interact with one another. The benefit of

tackling any problem is that it makes it easier to recognize and identify the crucial
factors and limits, as well as how they interact. It keeps people vigilant and continually

conscious of the fact that no one element, phenomena, or problem should be handled

without consideration of how it interacts with other elements. This approach emphasizes

the importance of taking into account problems' interactions rather than treating them

independently. In actuality, the word system indicates a regularly interacting or

interconnected group of elements constituting a "unified whole".

In relation to the present study, this theory elaborated the relationship of each step

in a budget process and how interconnected each step is. As it emphasizes the purpose

of interactions, this will prove that a budget process should not be taken lightly as it will

affect different aspects on the operations of the organization, which also concludes that

the development of a standardized budget process will be vital for the continuous

improvement of student organizations.

Propounded by Pfeffer in 1992, organizations frequently utilize budgets because

they can better understand how internal resource dependencies work. As opposed to

formal organizational charts, the hierarchy of budgets frequently reveals organizational

priorities and dependencies better. A "rationalized" statement of goal for the upcoming

year that is understood by both employees and outsiders can also be included in the

authorized budget. Moreover, Budgets are significant instruments of power. Resources

are under the supervision of budgeters because departments often rely on budgets for

general operations. These asymmetric dependencies can be used by those in charge of

planning and approving budgets to gain advantage. By examining and/or approving

annual budgets, external organizations might also have an impact on internal

processes.
 This theory proved the existence of dependencies in a budget process and how a

standardized budget system will connect each process harmoniously. Pfeffer instilled

those asymmetric dependencies proved the unfair treatments that is used as control

mechanisms by certain individuals in an organization. With the analysis of budget

practices of the student organizations, several factors will sure affect the operations as

well as the whole budget allocation. As the theory’s principles guided the researchers’

objective of the study, the need for a standard budget system for student organizations

was strengthened.