Beyond Budgeting: Assessing Dual Mediation & Moderated Mediation in Financial Governance for Sustainable Growth in Ethiopian Universities

Abstract

Objective: This study investigates the complex relationships between inter-institutional capacities—staff capacity, resource adequacy, and strategic planning—and external governance frameworks—normative and regulative controls—and their collective impact on budgeting performance in Ethiopian public universities. The research aims to assess these relationships through dual mediation and moderated mediation effects, providing insights into the interplay between governance structures and institutional autonomy for sustainable growth.

Research Methodology (RM): The study employed Structural Equation Modeling’s (SEM) Confirmatory Factor Analysis (CFA) to examine these relationships. Data were collected from 304 respondents across four major Ethiopian public universities, using a structured questionnaire designed to assess 21 key indicators related to institutional capacity, governance, and financial performance. The sampling technique employed was stratified random sampling, ensuring representation across various levels of faculty and administration levels. Key fit indices, including CFI, RMSEA, and SRMR, confirmed the robustness of the model.

Results: The findings reveal significant dual mediation effects, where normative and regulative frameworks mediate the relationship between internal institutional factors and budgeting performance. Additionally, external governance structures exert a moderating effect on the relationship between strategic planning and financial performance, often constraining institutional autonomy. Specifically, staff capacity (β = 0.476, p < 0.001) and strategic planning (β = 0.389, p < 0.001) were identified as the most influential internal factors, though their impact was significantly shaped by governance frameworks.

Inferences: These results highlight the tautness between the need for accountability through governance structures and the institutional autonomy required for effective financial management. The dual mediation and moderated mediation findings suggest that while governance frameworks aim to ensure transparency, they can often limit the positive effects of strategic financial planning, reducing universities' capacity to optimize resource allocation and budgeting outcomes.

Recommendations: To enhance financial outcomes and promote sustainable growth, it is recommended that Ethiopian public universities adopt a governance model that balances regulatory accountability with institutional autonomy. This should be complemented by targeted investments in staff development, resource adequacy, and long-term strategic planning to improve budgeting performance. Policymakers must re-evaluate governance frameworks to ensure they enable, rather than hinder, effective financial management.