Indonesian State-Owned Enterprises Research Articles

Financial Technology and Service Quality for Purchasing Decisions Through Customer Trust in Indonesian State-Owned Enterprise (BUMN)

The rapid progress of the internet and technology continues to unfold, giving rise to innovations in various sectors dependent on these advancements. Financial technology is one such evolving technology in the current landscape. According to the theory, financial technology is defined as the application of technology aimed at enhancing the value of financial services and has the potential to increase customer trust through the development and provision of products. However, specific research on financial technology remains scarce. The focus of this research is to assess the influence of financial technology and service quality on purchasing decisions through customer trust. The research methodology employs a quantitative approach with the distribution of questionnaires. The sample for this study consists of 360 respondents, and the data analysis technique used is Structural Equation Modeling-Partial Least Square (SEM-PLS). The results of this study indicate that financial technology and customer trust significantly and positively impact purchasing decisions. Service quality also has a positive and significant effect on customer trust and purchasing decisions. However, financial technology and purchasing decisions do not exhibit a significant positive impact. The inclusion of the customer trust variable is considered crucial as it can mediate relationships with other variables.

Corporate Sustainability and Financial Performance: Evidence from State-owned Enterprises in Indonesia

Corporate sustainability is a business approach to meet company needs and create stakeholders’ value in the long term. This is reflected in the company’s sustainable strategic planning and responsibility that is more inclusive and focuses on environmental, social, and corporate governance. This study aims to analyze whether corporate sustainability has an impact on the company’s financial performance. The sample studied consisted of 13 listed State-owned Enterprises (SOEs) in Indonesia for the period 2017–2021. To measure corporate sustainability, independent variables consist of the three pillars of environment, social, and governance or ESG (environment, social, governance). The environmental pillar consists of three categories, namely resource use, emissions, and innovation. While the social pillar consists of four categories, namely labor, human rights, community, and product responsibility. Finally, the governance pillar consists of management, shareholders, and social responsibility strategy. The company’s financial performance which is the dependent variable was measured using data on return on investment (ROI) and return on equity (ROE). Data analysis technique used is Automatic Linear Modeling using SPSS. The results of the study show a positive significant relationship between product responsibility (on the social pillar) with ROI and ROE. On the other hand, there is a negative significant relationship between management (on the governance pillar) to ROI and ROE. While other variables show no significant relationship to both ROI and ROE. The practical impact of this research will help academics, business entities, corporations, policymakers, regulatory authorities, and governments to better understand the relationship between sustainability and financial performance. It can also help companies to operate more effectively and efficiently in implementing corporate sustainability in state-owned enterprises in developing countries such as Indonesia. Keywords: corporate sustainability, ESG, financial performance

Is There A Conflict Of Interest In Indonesia’s Soe Investment Decision?

In financial management, the Director of State-Owned Enterprises (SOEs) in Indonesia synergizes with the Ministry of SOE to make investment decisions. One of the most common types of investment in SOEs is the purchase of shares in private companies. Through buying shares, SOEs can expand their business lines and project bigger profits. However, it is often found that the decision to purchase private company shares is made by SOEs due to a conflict of interest. This paper aims to determine the level of involvement of conflicts of interest in the decisions of SOEs in Indonesia to invest in the purchase of shares of private companies. Due to data limitations, the authors used a qualitative technique with an explanatory case study to meet the research aims. The analysis tested of 14 Indonesian SOEs' investment decisions when investing in the purchase of shares in private companies during the 2013–2022 period. The findings show allegations of conflicts of interest in several share investment decisions made by SOEs in Indonesia. This conflict of interest can occur because of a family relationship between the Board of Directors of SOEs and the management of private companies. In addition, there is also a political-party relationship between the parties involved. These findings can help several parties, including SOE and the Ministry of SOE, better understand the limits of investment that can be made. In the long run, the Ministry of SOE, as the supervisor of SOEs, can establish an early warning system to determine whether or not the investments made are appropriate. Most of the previous research only examined the effects of a company's investment and its impacts. It explores the company's stock price valuation process. No research has been found that specifically discusses SOE investment in Indonesia in private company shares.

Culture Internalization for AKHLAK BUMN: A Uniformized Core Values of All Indonesian State-Owned Enterprises

In today's business landscape, companies must be increasingly agile to meet the demands of developing business potential, changing customer needs, and rising competition. This includes State-Owned Enterprises (SOEs) that aim to deliver social and economic value. Internalization of core values is crucial in creating a culture that drives the company's performance. Therefore, the activation program and measurement methods for culture are key to the success of the transformation. Through the implementation experience, this practitioner study aims to identify the necessary infrastructure for managing the uniformized culture, activation programs, and measurement methods in companies. The core value set by the Ministry of SOEs or AKHLAK BUMN, guides the behavior of employees to support company performance. Implementing core values in each SOE company will facilitate talent mobility and ensure that the transformation process aligns with the ministry's objectives.

Effect of intellectual capital on organizational performance in the Indonesian SOEs and subsidiaries: roles of open innovation and organizational inertia

PurposeThis study aims to investigate the direct effect of intellectual capital on the organizational performance of Indonesian state-owned enterprises (SOEs) and their subsidiaries. Furthermore, it also examines whether the relationship is mediated by open innovation and moderated by organizational inertia.Design/methodology/approachThis study is designed as quantitative research. A survey method is employed to collect data by distributing questionnaires to the upper-level managers of the SOEs and their subsidiaries. A total of 293 questionnaires were distributed to the respondents, and 97 responses were obtained for further analysis. The partial least square structural equation modeling (PLS-SEM) is used to test the hypotheses. A mediation-moderation research framework is employed.FindingsThe results show that intellectual capital has a positive effect on organizational performance. Further results also demonstrate that open innovation mediates the intellectual capital–organizational performance relationship and organizational inertia moderates the intellectual capital–organizational performance relationship. Theoretically, the findings contribute to the resource-based view (RBV) and knowledge-based view (KBV) by providing empirical evidence of the importance of distinctive internal resources in achieving superior organizational performance. Practically, the findings provide strategic information for managers that they should properly manage intellectual capital, open innovation and organizational inertia because of their effects on organizational performance.Originality/valueFirst, this study addresses the previous research gaps by confirming that intellectual capital has a positive effect on organizational performance in the research setting of an emerging market. Second, by using a mediation research framework, this study shows that open innovation mediates the relationship between intellectual capital and organizational performance. Third, by using a moderating research framework, this study also reveals that organizational inertia weakens the relationship between intellectual capital and organizational performance. Those associations are rarely researched.

Corporate governance and Indonesian state-owned companies’ performance: Agency and institutional perspectives

The purpose of this study is to investigate the relationship between corporate governance practices and Indonesia’s SOEs' performance. State-owned enterprises (SOEs) are often criticized for underperformance and political manipulation, raising doubts about the efficiency of implemented corporate governance mechanisms. Additionally, this research examines the moderating role of board diversity on the relationship between good corporate governance (GCG) and performance. This study adopted a quantitative method to analyze secondary data from SOE’s financial statements from 2012 to 2019. The key independent variable is the GCG score, while return on assets is the dependent variable. The regression model incorporates managerial diversion variables and control variables. Surprisingly, the results found that corporate governance practices adversely affect the performance of Indonesian SOEs, particularly when board members have political affiliations. Institutional theory explains the negative relationship between the implementation of GCG and the performance of state-owned companies from coercive and mimetic perspectives. The phenomenon often happens in a developing country when a new system is adopted without fully understanding its mission. Additionally, the significant role of the Board of Commissioners' political connection as a moderating variable supports the conjecture of the managerial diversion perspective. This research contributes empirical insights for SOE stakeholders about corporate governance implementation and the performance of Indonesia's SOEs from the perspective of an emerging economy. The paper contributes novel views to agency and institutional theory for developing countries.

Unraveling the Effect of Marketing Mix 7P on Consumer Purchasing Decisions: A Study of Gerai Daging Online Store at PT. XYZ

Nowadays the internet presence allows the exchange of information and communication flows that are not limited by time and space. The increasing number of internet users in Indonesia has led to a new trend globally, which is the online shopping trend. PT XYZ (Persero) is one of Indonesia's state-owned enterprises engaged in the livestock sector. PT XYZ has a retail store that sells livestock products, both fresh dan processed. A marketing mix is a tool that can be used by companies to achieve marketing goals in target markets. The objective of this study is to determine the influence of marketing mix 7p (product, price, promotion, people, process, physical evidence, and place) on consumer purchase decisions at the Gerai Daging online store XYZ. This research used 55 respondents with a purposive sampling technique. The research was conducted by distributing questionnaires to respondents. Data were analyzed using SPSS Version 25 software with multiple regression analysis. The results show that marketing mix 7P which consists of 7 attributes, namely product, price, promotion, people, process, physical evidence, and place, didn't show any influence on purchasing decisions at Gerai Daging online store PT. XYZ either simultaneously or partially.

The Effect of Organisational Commitment in Mediating the Relationship between Transformational Leadership and Corporate Competitive Advantage (Study on State-Owned Companies in Indonesia)

This study aims to test and analyze the relationship pattern of transformational leadership, organizational commitment, and corporate competitive advantage. The study was conducted in three Indonesian state-owned enterprises. Data will be collected by distributing a questionnaire to 156 managers. The number of questionnaires that can be used is 120. Data analysis is performed using a HE SEM equipped with AMOS as the data processing application. The results of this study show that: (1) Transformational leadership has a significant positive impact on organizational commitment. (2) Transformational leadership has a significant positive impact on a company's competitive advantage. (3) Organizational efforts have a significant positive impact on a company's competitiveness. (4) Organizational commitment mediates the impact of transformational leadership on a firm's competitive advantage.

Innovation Challenges in Infrastructure Cluster State-Owned Enterprises in Indonesia

Objective – In accordance with the direction of the Ministry of State-Owned Enterprises (MSOE), the Indonesia Infrastructure Research & Innovation Institute (I2RI), which has 10 BUMN members, has collaborated in developing research in the infrastructure sector. With different strategies and industrial backgrounds, they have opportunities and challenges to develop research that is beneficial to the common interest. Knowledge of existing challenges is required, using the gap analysis method of business size, management commitment, research & funding schemes, and research and innovation progress and achievements. Methodology – Identification of gaps is carried out by collecting and comparing data on revenue, assets, management commitment documents, research schemes, and funding, research units, business processes, core competencies, joint research programs, as well as technology adoption that each I2RI member has carried out, and also data on infrastructure market potential. Findings—It was found that all I2RI member companies still have gaps in terms of business size (revenue and assets), management commitment, technology mastery, and research and innovation capabilities. Apart from gaps, opportunities were also found in the supply chain circle and national infrastructure market that they could exploit. Novelty – This gap can be closed by being led by members who have financial stability and mature research collaboration & funding experience. Increased commitment is also needed to share knowledge and technology to equalize the understanding and maturity of all members. Type of Paper: Empirical JEL Classification: O31, H79, P13 Keywords: Gap Analysis; Research; Innovation; Collaboration; Challenges; Infrastructure. Reference to this paper should be made as follows: Wibawa, E.D; Sentosa, G.A; Saputra, R.A. (2024). Innovation Challenges in Infrastructure Cluster State-Owned Enterprises in Indonesia, J. Bus. Econ. Review, 8(4), 11–24. https://doi.org/10.35609/jber.2024.8.4(2)

Government Investment and Capital Participation to State-Owned Enterprises in Indonesia to Mitigate The Impact of The COVID-19 Pandemic: Is It Effective?

The National Economic Recovery (PEN) Program is set by the government of Indonesia comprehensively regarding the handling of the devastating impact of COVID-19. The target recipients of the PEN program are classified into two, namely: the first group, State-Owned Enterprises (SOEs), and the second group are non-SOEs business units, where for SOEs this is done in the form of State Capital Participation (PMN) and Government Investment (IP). This research aims to analyze the impact of the PEN program on SOE performance. The analysis results show that the PEN Program has a positive impact on SOEs, as seen from SOEs ROA. The PEN program that has been running has not been able to improve significantly. However, it can be said that the PEN Program has been able to protect the operations of SOE recipients of the PEN program. In addition, the PEN Program has had an impact on achieving positive EAT growth in almost all recipient SOESs. The PEN program for SOEs needs to be re-evaluated, especially for SOEs that had the potential to perform poorly before the pandemic.

Review of Asset Management Practice in Indonesian State-Owned Enterprise

This study examines Indonesian State-Owned Enterprises (SOEs) asset management methods, problems, and financial and operational performance effects. The report synthesizes case studies and academic research on how large organizations manage their huge and diverse asset portfolios and how governance, regulatory frameworks, and human resource practices affect their effectiveness. The research begins with case studies of talent management innovations from big Indonesian SOEs. These cases show how proactive human resource approaches can boost company commitment and reduce turnover, improving asset management efficiency. According to the research, governance and legal frameworks influence asset management techniques. Studies show that corporate governance quality affects SOE operational performance. The paper explores how reforms and legislation affect state asset management, highlighting the major changes in SOE governance and legal frameworks, particularly after economic and political reforms. Asset management difficulties for Indonesian SOEs include managing large and diverse asset portfolios, integrating modern management frameworks, and optimizing state asset revenue. According to the study, comprehensive asset management systems, governance transparency, and professional management can address these difficulties. The research examines how asset management strategies affect Indonesian SOE profitability, corporate governance, and performance measures. Strategic asset management boosts financial performance, especially profitability. SOE profitability is greatly affected by current asset and liability management. The study offers advice to Indonesian SOEs and policymakers. Enhancing financial and operational performance requires comprehensive asset management, governance changes, and strategic innovation. These efforts boost Indonesia's economy, demonstrating the importance of asset management in SOE performance.

The Influence of Energy Consumption on Company’s Carbon Emissions; Is GCG Capable of Reducing The Carbon Emissions, Research on State-Owned Enterprises in Indonesia

The escalating global temperature resulting from climate change demands urgent attention. Carbon gas pollution, a leading contributor to climate change, induces a greenhouse gas effect. This study aims to assess the influence of Energy Consumption on Carbon Emissions generated by companies. Additionally, it explores the relationships between Carbon Emissions and other variables, including Good Corporate Governance (GCG) practices, Profitability, Size, and Debt Ratios of companies, utilizing an analytical framework model for regression analysis. The research relies on data extracted from annual and sustainability reports of 31 State-Owned Enterprises (BUMN) in Indonesia spanning the years 2018 to 2022. The findings underscore that GCG Practices, Debt Ratios, Size, and Energy Consumption exert a direct impact on environmental performance. In contrast, Profitability does not demonstrate a direct influence on the magnitude of Carbon Emissions produced. The empirical evidence indicates uncertainty in the results when compared with other studies examining factors influencing company performance.

The Moderating Effect of Financial Distress in The Relationship Between Debt Covenant and Political Cost Towards Accounting Conservatism Implementation: An Empirical Analysis From SOEs in Indonesia

This study aims to examine the impact of debt covenants and political costs on the implementation of accounting conservatism, with financial distress as a moderation variable. Debt covenants in this study are proxied by the debt-to-assets ratio and political costs are proxied by capital intensity. In this study, financial distress as a moderating variable was measured using the Altman Z-Score Modified and accounting conservatism using an accrual measure. This study used a purposive sampling technique and resulted in a total sample of 51 companies. In this study, research data were obtained from all state-owned enterprises (SOEs) listed on the Indonesian Stock Exchange for the period 2020–2022. The analysis technique used in this research is multiple linear regression analysis with STATA v13. The findings of this study indicate that debt covenants have a significant negative effect on the implementation of accounting conservatism, while political costs do not affect accounting conservatism. Furthermore, this study proves that financial distress can moderate the effect of debt covenants on accounting conservatism. In contrast, financial distress has not shown its ability to moderate the impact of political costs on accounting conservatism. Keywords: Accounting Conservatism, Debt Covenant, Political Cost, Financial Distress

Employer Branding to Improve Employee Loyalty after a Business Merger in PT Pelindo Terminal Petikemas

In today’s world, solid employer branding is important for any company or organization. Ambler & Barrow (1996) defined employer branding as the process of building and promoting a company’s reputation as an employer. Ilyas et al. (2020) stated that employer branding has a strong positive relationship with employee loyalty and the extent to which employees are committed to their organization and its goals. When a business goes through a merger, employee loyalty becomes an important factor in ensuring the company’s productivity, which is something that PT Pelindo Terminal Petikemas and some other Indonesian State-Owned Enterprises have gone through in recent years. The primary research objective of this study is to identify the specific aspects of employer branding that can be prioritized by PT Pelindo Terminal Petikemas to enhance employee loyalty. The methodology used is primarily quantitative research with correlational analysis as the statistical model, however, additional qualitative data was also collected and analyzed. The primary data were acquired through an online questionnaire given to the employees of PT Pelindo Terminal Petikemas. This study concludes that employer branding and employee loyalty have a strong positive significant correlation. Furthermore, it was also found that the employer branding dimensions with the strongest correlation with employee loyalty are organizational culture, ethics and corporate social responsibility, and diversity. PT Pelindo Terminal Petikemas can focus on improving the organizational culture, ethics and corporate social responsibility, and diversity aspects of employer branding to improve employee loyalty. The research also provides actionable solutions for PT Pelindo Terminal Petikemas to further strengthen its employer branding and improve employee loyalty.

Performance Evaluation of State-Owned Company Stocks in Indonesia

This study delves into the performance of Indonesian state-owned enterprises (BUMN) stocks from February 2021 to October 2023, attracting investor attention due to their strategic position in the national economy. However, the stock performance during this period exhibited suboptimal movements, failing to surpass the returns of the Indonesia Stock Exchange Composite Index (IHSG). To address this, a prudent investment strategy is essential, encompassing portfolio construction and management. In portfolio construction, the study employs proven smart beta strategies, known for delivering superior returns compared to traditional portfolios. Portfolio management involves testing two strategies: a passive approach utilizing the buy-and-hold technique and an active approach employing portfolio recomposition. This quantitative descriptive study utilizes historical closing price data, forming portfolios based on selected beta groups. Weighting is adjusted, with higher beta stocks receiving a larger allocation in the portfolio. The research compares two beta groups (high and low) and two investment strategies (active and passive) using the Sharpe, Treynor, and Jensen indices. The results indicate that the high-beta group and active strategy outperform, aligning with the investment adage "high risk, high return." The high-beta group yields higher returns due to its increased risk profile, consistent with the notion of high-risk, high-reward investments. The active strategy provides opportunities to discard underperforming stocks and enhance the weighting of well-performing ones during recomposition. These findings are valuable for investors seeking to capitalize on BUMN stocks at lower prices. The study aids in minimizing negative returns (losses) by identifying the most suitable strategy for BUMN portfolios. Investors can leverage this research to make informed decisions and navigate the challenges associated with investing in state-owned enterprises.

Proposed Strategy on Diversity Climate, Organization Development, and Organization Effectiveness in Indonesian Transportation Company

This research aims to comprehensively investigate the impact of diversity climate on organizational development and effectiveness within PT Thomas Gesit, a state-owned enterprise in Indonesia. The study is motivated by the need to address the challenges posed by diversity and its influence on organizational practices, particularly in the context of a specific division within the company. The research is guided by the following objectives: to identify and analyse the organizational practices unique to the company that impact diversity climate and employee collaboration, to implement HR strategies based on the existing conditions for the benefit of similar companies in the industry, and to explore the influence of diversity climate on employee collaboration within the state-owned enterprise. All the source persons’ data is anonymous and presented in pseudonyms to maintains confidentiality regarding the company’s identity, the researcher aims to uphold the principles of responsible scholarship and avoid any unintended repercussions.

Corporate Governance toward 5.0: Insights from State-Owned Enterprises in Indonesia

Existing research separately examines factors like qualification, tenure, and independence in relation to financial performance, overlooking the potential combined or interactive effects. This research intends to determine the role of the board of directors in addressing future challenges encountered by Indonesian state-owned enterprises. The research methodology involves quantitatively correlating independent and dependent variables, with or without variable control, utilizing nine financial ratios to assess firm conditions. The study utilized secondary data from financial statements and annual disclosures of Indonesian state enterprises from 2009 to 2016. The findings indicated that firstly, the degree, whether with or without control variables, is associated with Return on Asset and Fixed Asset Turnover. Secondly, board tenure, with or without control variables, does not exhibit a correlation with financial performance. Thirdly, the size of the independent board of directors, with control variables, does not correlate with financial performance, whereas without control variables, it is correlated with Net Profit Margin and Cash Ratio. This study introduces a new concept of board performance to predict bankruptcy indicators in companies, considering their Return on Assets (ROA) and Fixed Asset Turnover.

The hidden vulnerabilities behind financial sustainability: a case study of a sugarcane farm business in Pemalang City, Central Java, Indonesia

This study assesses the financial viability of a 4-hectare sugarcane farming enterprise operated by Perhutani, an Indonesian State-Owned Enterprise. The farm is situated in the geographical limits of Pemalang City, which is located in the Central Java Province of Indonesia. This study employs a financial feasibility analysis approach that involves the computation of key financial indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), Pay Back Period (PBP), Benefit Cost Ratio (BCR), and the application of sensitivity analysis. Overall, the assessment of the viability of a 4-hectare sugarcane farming enterprise indicates that it is financially feasible and has the potential to operate as a sustainable business. This conclusion is drawn from the positive numerical values obtained through various financial analysis techniques. Nevertheless, it is evident from the conducted sensitivity analysis that sugarcane farming is a highly susceptible business to fluctuations in prevailing conditions. When molasses production experienced reductions of 10% and 15%, most financial feasibility analysis estimates yielded negative values. The issue of production vulnerability extending beyond economic feasibility has been rendered inconspicuous by many reasons, including climate change.

Fishbone diagram: Application of root cause analysis in internal audit planning

Purpose: This study applies a fishbone diagram to analyze the root cause of problems in the internal audit planning of J Corp, an Indonesian state-owned enterprise. Research methodology: A qualitative approach was employed to conduct a case study at the internal audit unit of an Indonesian state-owned enterprise. Research data were gathered from the results of focus group discussions with internal auditors, the analysis of the company’s standard operating procedure for internal auditing, and the observation of the workflow of internal audit planning. These data were then analyzed to identify the root causes of these problems. Results: Six key factors were identified that cause poor internal audit planning at J Corp. These are policies, processes, people, plants, programs, and products. To overcome these problems, this study provides several suggestions that can be implemented in the internal audit unit of J Corp. Limitations: This study is limited by the nature of the business and environment of J Corp, which affected the problems arising in the process of its internal audit planning; hence, the need to understand the entity to replicate this method for future research. Contribution: This study could be directly beneficial for internal auditors at J Corp to immediately improve the business process of internal audit planning. Furthermore, this study could contribute to future studies in which researchers or practitioners could replicate this method in another context. Novelty: The fishbone diagram was used to analyze the root causes of problems in the process of internal audit planning. Studies on the improvement of internal audit planning have been limited.

Employee performance of state-owned enterprises in Indonesia: The influence of job characteristics and work environment and employee engagement as an intervening variable

The purpose of this study was to determine whether employee performance is influenced by job characteristics, work environment, and employee engagement. The method used in this research was quantitative, employing a random sampling technique with 211 participants and data collection through a questionnaire. The data analysis technique used was Structural Equation Modeling Partial Least Square (SEM PLS). The results of this study indicate that (1) employee engagement is significantly influenced by job characteristics, (2) employee engagement is significantly influenced by the work environment, (3) employee performance is influenced by job characteristics, (4) employee performance is influenced by the work environment but not significantly, (5) employee performance is significantly influenced by employee engagement, (6) employee performance is significantly influenced by job characteristics through employee engagement, and (7) employee performance is significantly influenced by the work environment through employee engagement. It is expected that good employee performance will increase employee productivity.