Budgeting Under Pressure: Adaptive Practices in an Indonesian Public Service Agency

ABSTRACT : This study examines how institutional pressure translates into collective budgeting practices in an Indonesian educational public service agency whose revenue targets have been set below the previous year’s achievement for five consecutive years, despite achievement rates ranging from 113 to 142 per cent. Existing research largely explains budgetary slack as an individual reporting decision in experimental settings, leaving unexamined how external pressure becomes an internal routine. An interpretive case study combined participatory observation of budget planning forums, interviews, and documentation involving nine informants from the supervisory board, leadership, and planning team, analysed ethnomethodologically with NVivo. Three channels carry pressure to the agency, namely accountability demands, direct instructions, and social pressure, all operating on an unstable procedural basis. The agency responds with four interlocking practices : an informal division of roles, deliberate suppression of targets during budget reviews, exclusion of impermanent revenue sources, and reliance on in-year revisions as a buffer. The study concludes that target-setting in this agency is an organised collective response to institutional pressure rather than individual deviation, providing micro-process evidence of agencification in a developing country.

KEYWORDS: Adaptive budgeting, Coercive isomorphism, Institutional pressure, Public service agency, Agencification