Entrepreneurial Orientation in Government-Owned Bank: Do They Improve Competitive Advantage?

Maryono ,Imam Ghozali,Firdaus Basbeth,R Mahelan Prabantarikso,Amie Kusumawardhani

doi:10.5430/ijfr.v11n2p262

Abstract

In Indonesia, housing finance is mainly raised from banks, with the government-owned housing bank (GOHB) BTN taking the largest share of the market. In constantly growing population need for new housing unit every year and increased number of competitors requires managers of government-owned housing bank to be able to develop their dynamic capabilities and adopt a more entrepreneurial orientation (EO). However, (GOHB) are typically being linked to organization that administratively influenced by government that impeding GOHB from being high performance organization driven by EO. Moreover, the dual goals of GOHB which are business and social goals makes the managers struggle to develop and adopt entrepreneurial orientation, since they have to set priorities and trade-off between those goals. The aims of this study is to investigate the role of entrepreneurial orientation (EO) in improving competitive advantage of government-owned housing bank, and fills a gap in the literature by linking entrepreneurial orientation to the theory of dynamic capabilities. This study explored the mediating effect of multi-dimensional EO which is: innovativeness, proactiveness, and risk taking in the relationship between dynamic capabilities (DC) and competitive advantage. The method of the study is a survey using area sampling and proportionate random sampling to collect data from 115 managers in 20 branches in island of Java, during the month of May to August, 2018 (cross-sectional method). The result shows a positive relationship between dynamic capabilities to innovativeness, proactiveness and risk taking. As expecting risk taking has no mediating effect to competitive advantage.

Highlights

IntroductionIndonesia requires 800,000 units of new housing every year
According to government data, Indonesia requires 800,000 units of new housing every year
Based on the above discussion, we hypothesized dynamic capability positively relate to entrepreneurial orientation (EO), and since this study utilized EO as multidimensional construct, we explore the effect of Dynamic Capability (DC) to each dimension of EO

Summary

Introduction

Indonesia requires 800,000 units of new housing every year. The country needs to address a backlog of some 15 million units. The one million houses program was launched in mid-2015 which through this program the government aims to provide adequate housing facilities to low income families. Housing Finance Network (2017) reported that in Indonesia, housing finance is mainly raised from banks, with the government-owned Bank Tabungan Negara (BTN) taking the largest share of the market. The finance sector is lead (41%) by three states‟ owned bank and one private bank. To win the competition especially in providing housing loan for low income families, state-owned housing bank need to improve their competitive advantage and become more entrepreneurial driven organization and exploit their dynamic capability to be able to fill the housing backlog and leading competition with private housing banks. Rauch et al, (2009) suggested that firms which adopting entrepreneurial orientation (Rauch, Wiklund, Lumpkin, & Frese) is likely to perform better

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