Implementation of Islamic Work Values in Realizing Sharia Good Corporate Governance and Its Implications in Stakeholders Oriented Values (SOV) and Financial Performance of Islamic Banking in Indonesia

Abstract

This research examines the effect of Islamic work values on sharia good corporate governance (GCG), and its implications for stakeholders oriented values (SOV) and Islamic banking financial performance in Indonesia. The method of analysis uses Structural Equation Modeling (SEM) with a partial least square (PLS) test. The sample of this study is Islamic banking with an analysis unit of 8 Islamic Commercial Banks in Indonesia. The sampling technique uses a sampling method randomly. The results of the study show that Islamic work values positively influence SOV. Likewise, Islamic work values have a positive effect on sharia GCG. While Islamic work values have no positive effect on sharia GCG and have no implications for SOV. Likewise, Islamic work values do not have a positive effect on financial performance. While Islamic work values have a positive and significant effect on sharia GCG and have implications for financial performance. Islamic work values, combined with sharia GCG, are still oriented to shareholders. For Islamic banking, the GCG model adopted in Indonesia refers to the Continental European model, which is still oriented to shareholders. High moral commitment is needed to implement Islamic work values and Islamic GCG so that it can have implications for the interests of stakeholders. For regulators, GCG reforms need to consider specific business, legal, and social societies so that the objectives of sharia GCG can be achieved optimally.