Innovation capacity and social capital as mediators of relationships in integrated quality management with sustainable performance of village-owned enterprises in Klaten district, Central Java, Indonesia

Abstract

The objective of this study is to research sustainability performance in village-owned enterprises as village-based economic driving institutions through integrated quality management with innovation capabilities and social capital in a single model known as Resource-Based View (RBV) development. Directors of the 354 Village-Owned Enterprises in Klaten Regency made up the study's participants. This study used a purposive sampling technique with a total sample of 190 BUMDes. The analysis tool used is Structural Equation Modeling (SEM). The results of the study show that integrated quality management affects sustainable performance. The influence of integrated quality management on sustainable performance is mediated by innovation capabilities and social capital. The outcome of the study is that BUMDes' performance will be sustainable if they have specific resources and capabilities implemented in integrated quality management based on the idea of human resource development such as being actively involved in BUMDes management operations and participating in the empowerment of BUMDes. It is essential for the government of Klaten Regency, Central Java Province to develop leadership management by providing directors leadership training so that they can adapt and be responsive to change and foster a sense of trust in the social environment such as trust in employees, the government and fellow citizens. In addition, the BUMDes director can promote regeneration by encouraging individuals to try new ideas without fear of failure.