The Effect of Competitive Advantage towards Financial Performance with Good Information Technology Governance as Moderating Variable

Ira Hapsari

doi:10.30595/kompartemen.v16i2.2406

Abstract

Bank’s strength competitive advantage value in digital economic era is depend on its digital and online services quality. The higher usage of online service will enhanced the bank’s profit thus will be reflected in its financial performance. This is the main function of Good IT Governance (GITG) to assure the qualified and safe IT implementation in each bank. This research aimed to analyze the effect of competitive advantage toward financial performance by good IT governance as moderating variable. Competitive Advantage was represented by assets utilization capability and financial performance was represented by ROA (Return on Assets). This research studied on 13 listed banks in Indonesian Stock Exchange which annually published their financial reports during 2012-2016 period. 65 Samples obtained by purposive sampling method,and to strength these objectives, a questionnaire was also developed to measured the good IT governance value. Moderating Regression Analysis using absolute difference method used to examined the research model and hypotheses.The result found that CA has positive effect toward while also found that GITG not moderating the causal relationship between CA toward ROA Keywords: CA, Good IT Governance, ROA

Highlights

Indonesia has been classified as bank-based country (Levine, 2002) where78% of financial system are coming from Indonesian banking activities
The result found that Competitive Advantage has positive effect toward Return On Assets while found that Good Information Technology Governance not moderating the causal relationship between Competitive Advantage toward Return On Assets
competitive advantage (CA) is gained by the companies which succeed in gathering its intangible value into dynamic form of technological skills, knowledge, experience and strategic planning (Nixon, Augustine, and Joseph, 2013)

Summary

Introduction

Indonesia has been classified as bank-based country (Levine, 2002) where78% of financial system are coming from Indonesian banking activities. The development of information, technology, and knowledge-based economy or widely known as Resource Based Theory (RBT) of the company considered as one of the effective and sophisticated method in this management area (Newbert, 2007). In this economic era, company resources such as human capital became the vital factor in keeping and sustaining competitive advantage and creating performance of the company (Maditinos et al, 2011). Elements of financial report can be reflected into a ratio, called financial ratios These ratios such as Return on Asset (ROA) is needed by stakeholders to examined whether company get profit. It contradicts by the research done by Kurniawan (2005) and Rialdy (2010) who found empirical evidence to the contrary that pricesely the financial performance has a positive effect toward the competitive advantage

Objectives

Methods

Results