Indonesian State-Owned Enterprises Research Articles

Characteristics of a Good Board of Directors for Indonesian SOEs Performance

Introduction/Main Objectives: This research aims to empirically show the positive influence of the board of directors' characteristics on company performance, proxied by female directors, political connections, economic and/or business educational backgrounds, and education levels. Background Problems: Essential characteristics are required to produce quality strategies because they directly affect the performance of SOEs, and Regulation PER-8/MBU/08/2020 of the Minister of SOEs restruc­tures the BOD to increase the proportion of women. Novelty: This research measures SOEs' performance from their financial, adminis­trative, and operational aspects. It comprehensively assesses the dual function of SOEs as public servants and producers of state profits. Research Methods: A total of 245 Indonesian state-owned enterprises were examined between 2014 and 2019 using panel regression with the random effect model. The companies’ performance data were obtained from the Information Management and Documentation Officer (PPID) of the Ministry of SOEs of the Republic of Indonesia (RI). Finding/ Results: The results show that female directors and political connections positively influence the performance of SOEs. According to the robust­ness test, directors with economic and/or business education backgrounds positively influence the financial performance, and the higher the education level is, this negatively influences the performance of SOEs. Conclusion: Essentially, this research supports the plan of the Minister of SOEs to increase the proportion of women on the boards of directors. The findings also prove that political connections strengthen the personal qualities of SOE directors, whether they are female or not.

Proposed Design of Performance Management System for Business-to-Business Information and Communication Technology of State-Owned Enterprises in Indonesia

Proposed Design of Performance Management System for Business-to-Business Information and Communication Technology of State-Owned Enterprises in Indonesia

Proposed Design of Performance Management System for Business-to-Business Information and Communication Technology of State-Owned Enterprises in Indonesia

As the market competition for ICT products and services for businesses continues to increase, ICT B2B companies are expected to improve their performance in order to win market share. Design and implementation of Performance Management Systems (PMS) are essential components of management control systems for providing the best business solutions. This research proposes a modification of the Malcolm Baldrige Criteria for Performance Excellence (MBCfPE) and Knowledge-Based Performance Management System (KBPMS) frameworks for ICT B2B, given that MBCfPE is utilized for assessing performance excellence in SOEs. The design of the framework incorporates three perspectives: organizational results, internal process, and resource capabilities. According to the research, there are a total of x performance indicators. Using correlation analysis of historical performance indicators to determine the relationship between indicators. The weighting of the performance indicators is based on the scoring reference from MBCfPE. Therefore, the modification of KBPMS design with MBCfPE-based scoring provides an excellent depiction of the performance of B2B ICT at Indonesian SOEs.

The Urgency of Preventive Supervision to Prevent Corruption in Indonesian State-Owned Enterprises

This study aims to present the urgency of preventive supervision based on good corporate governance (GCG) as a strategy for preventing corruption in Indonesian State-Owned Enterprises (SOEs). This research method uses a normative juridical approach, and the type of research carried out is a qualitative approach to produce descriptive data. Data collection techniques are carried out by collecting secondary data through library research, documents in the form of scientific contributions that have been published in research academic databases, and applicable laws and regulations. The dimension of the research problem starts from the fact that there is a lot of mismanagement in Indonesian state-owned companies, and they even go bankrupt. The findings of the research conclude that the strategy for preventing corruption in Indonesian SOEs must be supported by a corporate governance system consisting of governance structures, governance processes, and governance outcomes. In this context, the role of the board of commissioners is expected to be optimal to ensure and supervise the directors related to the corporate governance system in accordance with the principles of GCG in Indonesian SOEs. This has been regulated by several laws and regulations in force in Indonesia. Therefore, it is hoped that the credibility and effectiveness of Indonesian SOEs can be achieved, and have a positive impact on creating value for stakeholders, the economy, and people’s welfare. Thus, this study is interesting for companies and other stakeholders to improve the performance of the company in Indonesian SOEs through the creation of better business processes.

Law Enforcement of Corruption in The Business Framework of State-Owned Enterprises in Indonesia

: Law enforcement of corruption by corruptors still has gaps to be exploited by irresponsible parties in weakening the position of political or business opponents. The formulation in the legal system of criminal acts of corruption is unclear, making law enforcers less professional in applying the law in the field of criminal acts of corruption. The purpose of this study is to analyze and find corruption law enforcement regulations within the BUMN business framework that are not yet based on the value of justice and the weaknesses of corruption law enforcement regulations within the current BUMN business framework in Indonesia, as well as the reconstruction of corruption law enforcement regulations in Indonesia. SOE business framework based on the value of justice. The research method used is constructivism paradigm, sociological juridical approach, and qualitative analysis. The results of the study show that the law enforcement regulations for corruption within the BUMN business framework are not based on the value of justice, that the state financial loss will be closely related to the provisions of Law no. 1 of 2004 concerning the State Treasury and provisions related to the position, duties and functions of the Supreme Audit Agency (BPK). 2) The weakness of the legal substance is that in substance the existence of 4 (four) laws and regulations that are multi -aspects in BUMN and have different regulatory objects from each other have resulted in confusion over the financial accountability of BUMN. The weakness of the aspect of legal structure is that there is no synergy between law enforcers so that it is no longer fragmentary and the existence of the paradigm of the judiciary shows that the legal structure came first but has not yet been followed by adequate legal substance. Weaknesses in the aspect of legal culture are often subjective in nature which highlights, among other things, the loyalty and loyalty of law enforcement officials in carrying out and carrying out state duties, patterns of behavior and professionalism of officers, being one of the main issues that must be studied for reform and a solution in enforcing criminal law. corruption within the framework of an integral SOE business.

PROGRAM CORPORATE SOCIAL RESPONSIBILITY (CSR) BIDANG KESEHATAN PT FREEPORT INDONESIA DI ERA PANDEMI COVID-19

The implementation of CSR during the COVID-19 pandemic was constrained due to an uncertain and unprecedented situation, which had an impact on the implementation of CSR program. The purpose of this study is to analyze the CSR program in the health sector during the COVID-19 pandemic carried out by one of the State-Owned Enterprises in Indonesia, namely PT Freeport Indonesia (PTFI), which has been known as one of the companies that has a significant impact to Papua and Indonesia as well. PTFI continues to carry out CSR programs in the health sector as in previous years, as well as providing assistance for the prevention of COVID-19. However, although CSR programs in the health sector are still being carried out, few community empowerment programs are provided, and PTFI has not carried out community empowerment in dealing with health crisis. The implementation of PTFI's CSR program in the health sector during the COVID-19 pandemic faced many challenges. The challenges are mostly technical in nature due to social restrictions and health protocols that must be carried out, as well as matters related to infrastructure to facilitate working remotely.

A rasch analysis of the employee’s acceptance towards corporate culture value Akhlak in Indonesian state-owned enterprises

<span lang="EN-US">This study aims to determine employee acceptance of the corporate culture values </span><span lang="EN-US">of AKHLAK in BUMN, especially PT Pegadaian. The instrument used is a questionnaire based on the Theory of Resources Based View/ RBV and Theory of Planned Behavior/ TPB. The Rasch modeling was used with a survey method and a cross-sectional 2020 study time approach. The survey was conducted on 362 respondents who were drawn by quota sampling. The results of the analysis show a value of +1.58 logit, which is above the average logit item (+0.00 logit). These results indicate the respondent's agreement on employee acceptance of the corporate culture values </span><span lang="EN-US">of AKHLAK. The score that is most difficult to agree on by the respondents in the instrument on the questionnaire given is the 54th item, namely "Implementing the mandate given with low integrity". While the 11th item, namely "I am interested in a company that provides good health insurance" is the item that is most approved.</span>

Effect of Loss on Exchange on Net Income State-Owned Enterprises in Indonesia

Effect of Loss on Exchange on Net Income State-Owned Enterprises in Indonesia

Is quantifying performance excellence really profitable? An empirical study of the deployment of the Baldrige Excellence Measurement Model in Indonesia

Numerous studies continue to debate the financial benefits of employing the Baldrige Excellence Measurement Model (BEM) for a business. This paper aims to explore this issue by studying the implementation of BEM in Indonesian State-Owned Enterprises (SOEs) in 2013–2019 (t). More specifically, we analyze the relationship between the BEM in the current year (t) and the financial performance in the previous year (2012–2018/t-1) and the following year (2014–2020/t+1) using non-financial performance as a mediating variable. This method is intended to discover whether measuring the results for the current year considers the company's performance from the previous year and stimulates progress in the following year. This quantitative study is based on a sample of 174 firms and 3654 observational data points. Employing partial least square–path modeling (PLS-PM), we find that BEM deployment is strongly related to non-financial performance as measured by corporate social responsibility activities, customer satisfaction, workforce quality, and total productivity. Nevertheless, this relationship does not predict financial success for the company, as measured by profitability, financial leverage risk, and shareholder return. Other findings indicate that the BEM on SOEs is not implemented properly, as evidenced by an unbalanced weight score between financial and non-financial performance, non-independent examiners, and political interests at the leadership level. Hence, SOEs are unlikely to gain financially from BEM deployment. A more specific explanation is presented in the discussion and implication sections.

Authentic leadership and innovative work behavior through organizational culture: A study in Indonesian state-owned enterprises

Background: Innovation is one of the keys for organizations to win the competition and be able to survive. State-owned enterprises require employees to face the competition by showing innovative work behavior where leadership factors and organizational culture could influence this behavior. This study examines the role of authentic leadership in innovative work behavior through organizational culture as a mediator. Methods: Participants in this survey study were 272 employees of Indonesian state-owned enterprises, but only 153 employees from 17 work teams were involved in data analysis at the group level. The research instrument was adapted from the innovative work behavior scale, authentic leadership questionnaire, and the Indonesian state-owned enterprises culture scale, which consists of six core values: trustworthy, competent, harmonious, loyal, adaptive, and collaborative. Data collection in this study was carried out by distributing questionnaires in the form of a Likert scale online via a google form. The data were analyzed using partial-least square analysis. Results: The results showed that organizational culture mediated the relationship between authentic leadership and innovative work behavior. Conclusions: The group experience of the presence of an authentic leader can improve the implementation of organizational culture, which in turn may increase innovative work behavior at the group level.

Employee Work Performance in State-Owned Enterprises in Indonesia: A Reflection

The quality of performance of State-Owned Enterprises (SOEs) in Indonesia is currently in the spotlight because it is considered unsatisfactory. One of the causes of the low performance of this organization is the level of quality of performance of the organization's employees which is also unsatisfactory. In this study, factors that can affect the quality of performance of SOEs employees in Indonesia are analyzed. These factors include leadership style, work discipline, work motivation and work environment. Data were collected by distributing questionnaires to a number of field employees and validity and reliability tests were carried out on the data. Hypothesis testing is done by using Multiple Linear Regression test. The results of this study prove that only achievement-oriented leadership style and work motivation can boost the quality of performance of SOEs employees; work discipline and work environment do not have any impact on improving the quality of their performance. This proves that a leader who can provide motivation and read reward needs for employees is very much needed in SOEs. However, issues of discipline and work environment should also get more attention. The implication of this research is that SOEs must assess employee performance in terms of the quality of work and not only in terms of the achievement of the set target without paying attention to the quality of the achievement itself.

Factors Affecting Dividend Policy in Indonesian State-Owned Enterprises (SOEs)

This study examines factors affecting dividend policy with firm size, leverage, and profitability as control variables. Among the management policies aimed at improving the welfare of stakeholders, the result is in the form of dividends. Investors who receive dividends from companies that distribute dividends expect the company's share price to increase. The study population was all publicly listed SOEs listed on the IDX in 2022, with 20 companies in the observation year for 11 years from 2011 to 2021. The determination of the sample in this study used the non-probability sampling method with purposive sampling technique so that the total sample into 220 observed companies. This study uses multiple linear regression. The results showed that dividend premium, free cash flow, and audit delay had a significant positive effect on dividend policy, and firm size, leverage, and profitability were able to be control variables for this direct relationship.

THE MOST-VALUABLE-MODEL IS AWARDED TO...? FORETELLING THE FINANCIAL INSOLVENCY IN THE CONSTRUCTION BUSINESS

This research seeks to accomplish two goals: to identify a statistical difference between the three financial distress models—Altman, Zmijewski, and Springate—and to describe which model proves to be the "Most-Valuable-Predictor" in terms of the accuracy with which it can predict the insolvency conditions of state-owned enterprises in Indonesia's construction industry. In this study, the purposive sampling approach was used to select the study's objects. With the aid of documentation techniques, financial data samples were gathered and put through the test of the difference analysis. This paper found a significant difference between the calculations of Altman, Zmijewski, and Springate models in predicting the financial difficulty in the SOE’s construction sector. The most accurate forecast for the industry's financial problems came from the Zmijewski model. The most influential contribution of this study is that it helps investors understand the financial risks before making an investment in the construction industry.

The effect of Islamic visionary leadership on organisational commitment and its impact on employee performance

This study aims to examine the effect of Islamic visionary leadership on organisational commitment and its impact on employee performance. This study uses explanatory quantitative research on 20 state-owned enterprises (BUMN) in the food and technology cluster in Indonesia, with 85 respondents who were processed using the structural equation modelling (SEM) with partial least square (PLS) (SEM-PLS) approach. The results of the study indicate that Islamic visionary leadership directly influences organisational commitment to the organisation in the food and technology cluster state-owned enterprises in Indonesia; Islamic visionary leadership directly influences employee performance in the food and technology cluster BUMN companies in Indonesia; Islamic visionary leadership indirectly influences employee performance through organisational commitment in the technology and food cluster BUMN companies in Indonesia; and organisational commitment affects employee performance in the technology and food cluster BUMN in Indonesia, Jakarta.Contribution: The results of this study show that the application of Islamic teachings in the leadership of organisations can improve organisational commitment and the performance of employees in the organisation in an Islamic context.

Auditor quality and real earning management of state-owned enterprises in Indonesia

Purpose. The study aims to examine the effect of auditor quality on real activity manipulation.
 Result. The population is 20 state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange for the period 2018–2020. Using the purposive sampling method, 57 observations for the specified period were obtained. Next, we used a linear regression model as the method. The results showed that auditor quality had no effect on real activity manipulation through abnormal Operating Cash Flow (CFO), abnormal Production Costs (PROD) and abnormal Discretionary Expenses (DISC). Auditor quality has no effect on real activity manipulation through abnormal CFO. This is because the auditor’s independence attitude decreases which causes management to manipulate real activities through abnormal CFO, namely by increasing the company’s sales value. Auditor quality has no effect on real activity manipulation through abnormal PROD. This is because a qualified auditor in the company is only a formality to provide assurance in the eyes of investors that the company is in good condition. So, management will manipulate real activities through abnormal PROD, namely increasing the company’s production. Auditor quality has no effect on real activity manipulation through abnormal DISC. This is because the client’s accounting flexibility from qualified auditors is hampered, where management will change earnings management by using real activity manipulation through abnormal DISC, namely reducing discretionary costs.
 Scientific novelty. This research is based on the application of the already known methodology and design developed by Sanjaya, the difference is that in this study we used SOEs as the object. Moreover, we employed different period from prior study which are in the year of 2018 to 2020. Also, this study uses agency theory because this is based on information asymmetry between the principal and agent, which overall indicates a certain novelty of our work.
 Practical value. The results of this study are useful for assessing the quality of auditors in increasing the credibility of financial statements to reduce risks that occur in financial statements such as real earnings management through abnormal CFO, abnormal PROD, and abnormal DISC. Prospects for its development are by expanding and adding objects and years, as well as used variables.

Risk Management and other Factors Preventing Fraudulent Financial Reporting by State-Owned Enterprises in Indonesia

This study aims to provide an overview of the effects of risk management and the implementation of good corporate governance (GCG), and the effectiveness of the internal audit function on the prevention of fraudulent financial reporting and its impact on the quality of financial reporting of state-owned enterprises (SOEs) in Indonesia. Questionnaires are used to determine risk management and other factors that influence each other and their impact on the quality of financial reporting. The questionnaire and survey results of 90 state-owned enterprises (BUMN) and 360 respondents. SEM-PLS was used to analyze the data, and the results show that the implementation of GCG, the effectiveness of the internal audit function and risk management have an effect on financial reporting. This is based on the results of research stating that the effectiveness of the internal audit function is able to prevent financial reporting fraud. The professionalism of the internal auditor, who must carry out audits in a correct and professional manner, demonstrates their credibility. This, and audit training, is often not optimal.

Enhancing Employee Engagement through Gamification: Empirical Study of an Indonesian State-Owned Enterprise

Highly engaged employees are vital in Indonesian State-Owned Enterprises. Considering the condition of deterioration in previous findings, particularly infrastructure services, one of the firms within the cluster has launched a nongaming context learning program known as UlarTangga for improving employee engagement. However, the effects of implementing the system to enhance engagement remain uncertain since previous studies showed ambiguous results, especially engagement in the context of an industrial or working environment. This study examines the possible effect of gamification on enjoyment through needs satisfaction to enhance employee engagement. The survey was conducted across departments that have experience using the game-mobile apps. The analysis in this study employs a quantitative methodology, with a total of 129 respondents remaining after a data cleansing process for outliers and testing assumptions. Inferential statistics and correlational analysis with partial least squares structural equation modeling were then used to analyze the data. This study discovered that enjoyment significantly affected employee engagement; gamification significantly affected enjoyment; gamification significantly affected need satisfaction; and need satisfaction significantly affected enjoyment. In addition, enjoyment fully mediates gamification and employee engagement; enjoyment fully mediates need satisfaction and employee engagement; need satisfaction and enjoyment fully mediate gamification on employee engagement; and need satisfaction partially mediates the effect of gamification on enjoyment. Thus, concluded that gamification elements could enhance engagement among workforces in a state-owned firm.

The Factors Influencing the Earnings Management in Indonesian State-Owned Enterprise Listed on the Indonesia Stock Exchange from 2016-2020

Managers' efforts to provide added value to the company can lead to conflicts of interest between agents (managers) and principals (owners). Problems may occur when relying on managers to control the company to improve company performance. This study aims to examine the factors that affect earnings management. This type of research is quantitative by using explanatory (Explanatory Research). The population in this study is State-Owned Enterprises (BUMN) listed on the Indonesia Stock Exchange. The sample of this research is 20 BUMN listed on the Indonesia Stock Exchange from 2016-2020. The sampling technique used is purposive sampling. The technique used to analyze the data is inferential statistical analysis. The hypotheses were tested using panel data regression analysis. The results showed that profitability and leverage positively affected earnings management, while size did not affect earnings management. This finding shows that SOEs' profit-generating factors and debt ownership motivate management to carry out good earnings management for their shareholders.

Internal Corporate Social Responsibility as a Microfoundation of Employee Well-Being and Job Performance

Very drastic environmental changes require the development of an adaptive performance management framework that supports the strengths of the company’s structure. The position of internal CSR as a resource that can solve performance problems needs to be proved. The purpose of the study was to analyze the effect of internal corporate social responsibility on job performance through employee well-being. To this end, this causal study surveyed 282 non-managerial employees at four strategic industrial state-owned enterprises in Indonesia. The respondents were recruited using the proportional random sampling technique. The collected data were analyzed using SEM with SPSS 26. The results showed that changes in job performance can be predicted by the adequacy of work resources and personal resources. Both resources can be realized by the existence of corporate social responsibility intended for employees. Internal corporate social responsibility was found to encourage increased work engagement and decrease burnout, which ultimately improves job performance. Internal CSR is an important personal and work resource for employees. Internal CSR is the company’s main orientation in an effort to strengthen the company’s performance structure while ensuring the implementation of the company’s ethical responsibility in its environment. From the theoretical perspective, this study implied the need for exploring the concept of internal corporate social responsibility to expand our understanding of the relationship between corporate social responsibility and personal and work resources and employee performance. Meanwhile, the practical implications of this study highlight the importance of microlevel corporate social responsibility programs to meet personal and work resource needs so that companies benefit from high employee engagement and low burnout in order to improve adaptive performance and the structure of the company’s performance.

Proposed Marketing Strategy for Pt. Kereta API Indonesia (Persero) to Increase the Number of Passengers

PT. Kereta Api Indonesia (Persero) or known as KAI is a State-Owned Enterprise in Indonesia with the obligation of organizing transportation that prioritizes passenger comfort, safety, and security. KAI is the only train transportation service in Indonesia, so it has a strong advantage over other modes of transportation. However, the Covid 19 pandemic has a great impact on KAI which resulted in a significant decrease in the number of passengers in KAI operating areas in Bandung in 2020-2022. Therefore, the purpose of this study is to analyze internally and externally what factors influence the decline in passengers on KAI, and what strategies are appropriate for KAI to implement in order to increase the number of passengers in the future. The internal analysis uses 3 tools, namely STP analysis, 7P analysis, and VRIO analysis, which is intended to determine the strengths and weaknesses of KAI. External analysis is carried out using 4 tools, namely PESTEL, Porter’s 5 Forces, competitor analysis, and customer analysis aimed at knowing the external opportunities and threats being faced by KAI. The findings from the internal and external analysis are used to analyze the SWOT. In the SWOT analysis, it was found that KAI has 3 weaknesses and 4 threats being faced. Then the TOWS Matrix is used to formulate the right proposed strategy for KAI in overcoming existing weaknesses and threats. There are 12 alternative strategies from the results of the TOWS analysis which are then grouped into 4 categories, namely ST strategy, WT strategy, SO strategy, and WO strategy. In these 4 categories, QSPM analysis is used to calculate the greatest weight value for each strategy based on the expert judgment from the KAI. The chosen strategy is the ST strategy which has 3 strategies, namely Implementing Social Marketing that shows the benefits of using KAI for the society & environment, Improving the quality of the services to increase value, and Attractive promotions only available for new members. It is hoped that the selected recommendation strategy can be implemented properly by KAI so that it can reach a wider range of consumers in order to increase the number of passengers.