Abstract
This paper discusses how Management Control Systems is used to control performance in local government owned companies in Indonesia. Performance becomes important and unique in local government owned companies since those companies are not only targeted by profit but they also have responsibilities for social function. This study focuses on performance control in water supply companies as typical local government owned company in Indonesia. Balance Scorecard is chosen as the performance measurement tool in all water supply companies in Indonesia. This research applies quantitative research in order to analyze cause effect relationship between variables by using Multiple Regression Analysis. Data is collected through survey by using questionnaires. The respondents were the managerial team and employees of local government owned companies in Indonesia. The results show that four perspectives of Balance Scorecard are modified into four types of performance i.e. financial, service, operational, and human resource performance. This performance measurement is used to control people in achieving targeted performance. Moreover, this performance measurement becomes an important part of management control systems. This research also discovers that management control systems is effective to influence performance, even when some interventions exist.
Highlights
There are some typical companies owned by local government in Indonesia
The four perspectives of balance scorecard are modified into four aspects of performance, i.e. Financial, services, operation, and human resource performance
The modified balance scorecard is use by all local government owned water supply companies in Indonesia. This performance measurement systems is applied nationally and all water supply company is obligated to send performance audit report to the national body that assist the development of water supply systems in Indonesia called Badan Pendukung Pengembangan Sistem Penyediaan Air Minum (BPPSPAM)
Summary
There are some typical companies owned by local government in Indonesia. Typically, local government in Indonesia has local government owned companies such as Regional Bank, Rural Bank/Rural Credit Firm, Hospital, and Water Supply Company.This research focuses on water supply company for several reasons. There are some typical companies owned by local government in Indonesia. Local government in Indonesia has local government owned companies such as Regional Bank, Rural Bank/Rural Credit Firm, Hospital, and Water Supply Company. Most of local government in Indonesia owns this type of company. The case being researched is comparable to other water supply companies in Indonesia. This will be beneficial to the researchers to do further research in the same type of companies but in wider scope. Local government owned companies receive a burden to achieve certain number of profit as a contribution to the Regional Income but the social mission should be the priority.
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